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Why did income growth vary across states during the Great Depression?

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Abstract

State per capita incomes became more disperse during the contraction phase of the Great Depression, and less disperse during the recovery phase. We investigate the effects of spatial dependence, industrial composition, bank failures and fiscal policies on state income growth during each phase. We find that industrial composition and spatial interdependencies contributed to negative state income growth during the contraction, whereas New Deal spending contributed to positive state income growth during the recovery phase. We find no evidence that differences in bank failure rates or state government expenditures contributed to variation in state income growth rates.

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  • Thomas A. Garrett & David C. Wheelock, 2006. "Why did income growth vary across states during the Great Depression?," Working Papers 2005-013, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:2005-013
    DOI: 10.20955/wp.2005.013
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    1. Garrett, Thomas A. & Marsh, Thomas L., 2002. "The revenue impacts of cross-border lottery shopping in the presence of spatial autocorrelation," Regional Science and Urban Economics, Elsevier, vol. 32(4), pages 501-519, July.
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    Cited by:

    1. Daniele Coen-Pirani & Michael Wooley, 2018. "Fiscal Centralization: Theory and Evidence from the Great Depression," American Economic Journal: Economic Policy, American Economic Association, vol. 10(2), pages 39-61, May.
    2. Duque, Valentina & Schmitz, Lauren L., 2020. "The Influence of Early-life Economic Shocks on Long-term Outcomes: Evidence from the U.S. Great Depression," Working Papers 2020-11, University of Sydney, School of Economics.
    3. Dylan Shane Connor & Tom Kemeny & Michael Storper, 2024. "Frontier workers and the seedbeds of inequality and prosperity," Journal of Economic Geography, Oxford University Press, vol. 24(3), pages 393-414.
    4. Price Fishback, 2010. "US monetary and fiscal policy in the 1930s," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(3), pages 385-413, Autumn.
    5. repec:osf:socarx:d93sj_v1 is not listed on IDEAS
    6. Price V. Fishback & Valentina Kachanovskaya, 2010. "In Search of the Multiplier for Federal Spending in the States During the Great Depression," NBER Working Papers 16561, National Bureau of Economic Research, Inc.

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