The Impact of New Deal Expenditures on Local Economic Activity: An Examination of Retail Sales, 1929-1939
**Revised version 2005** This paper empirically examines the New Deal's impact on local economic activity, as measured by retail sales, during the 1930s. Using a recently-uncovered data set that describes over 30 federal New Deal spending, loan, and mortgage insurance programs across all U.S. counties from 1933 to 1939, we estimate how the various New Deal programs that were designed to accomplish different objectives influenced retail spending. Our empirical approach accounts for both the simultaneity between New Deal allocations and economic activity and the geographic spillovers that likely resulted when spending in one county may have affected the economies of its neighbors. We find that New Deal spending on public works tended to promote retail sales in both the county where the money was spent and in contiguous neighbors, while spending on work relief increased economic activity in the county where the money was spent but at the expense of neighboring counties. Agricultural spending that limited production was associated with lower retail spending. New Deal loan programs appear to have had little or a somewhat negative effect. Finally, increases in the value of mortgages insured by the Federal Housing Administration had a strong positive effect on local economic growth during the Depression.
|Date of creation:||Feb 2001|
|Date of revision:|
|Publication status:||published as Fishback, Price V., William C. Horrace and Shawn Kantor. "Did New Deal Grant Programs Stimulate Local Economies? A Study Of Federal Grants And Retail Sales During The Great Depression," Journal of Economic History, 2005, v65(1,Mar), 36-71.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ben Bernanke & Martin Parkinson, 1989.
"Unemployment, Inflation, and Wages in the American Depression: Are There Lessons for Europe?,"
NBER Working Papers
2862, National Bureau of Economic Research, Inc.
- Bernanke, Ben & Parkinson, Martin, 1989. "Unemployment, Inflation, and Wages in the American Depression: Are There Lessons for Europe?," American Economic Review, American Economic Association, vol. 79(2), pages 210-14, May.
- Price V. Fishback & William C. Horrace & Shawn Kantor, 2001. "Do Federal Programs Affect Internal Migration? The Impact of New Deal Expenditures on Mobility During the Great Depression," NBER Working Papers 8283, National Bureau of Economic Research, Inc.
- Daron Acemoglu & Simon Johnson & James A. Robinson, 2002.
"Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 117(4), pages 1231-1294.
- Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution," NBER Working Papers 8460, National Bureau of Economic Research, Inc.
- J. Bradford DeLong & Lawrence H. Summers, 1988. "How Does Macroeconomic Policy Affect Output?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(2), pages 433-494.
- J. F. Couch & P. M. Williams, 1999. "New Deal or Same Old Shuffle? The Distribution of New Deal Dollars Across Alabama," Economics and Politics, Wiley Blackwell, vol. 11(2), pages 213-223, 07.
- Duffy-Deno, Kevin T. & Eberts, Randall W., 1991.
"Public infrastructure and regional economic development: A simultaneous equations approach,"
Journal of Urban Economics,
Elsevier, vol. 30(3), pages 329-343, November.
- Kevin T. Duffy-Deno & Randall W. Eberts, 1989. "Public infrastructure and regional economic development: a simultaneous equations approach," Working Paper 8909, Federal Reserve Bank of Cleveland.
- Bailey, Stephen J & Connolly, Stephen, 1998. "The Flypaper Effect: Identifying Areas for Further Research," Public Choice, Springer, vol. 95(3-4), pages 335-61, June.
- Stanley L Engerman & Kenneth L. Sokoloff, 2002.
"Factor Endowments, Inequality, and Paths of Development Among New World Economics,"
NBER Working Papers
9259, National Bureau of Economic Research, Inc.
- Stanley L. Engerman & Kenneth Lee Sokoloff, 2002. "Factor Endowments, Inequality, and Paths of Development Among New World Economies," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, vol. 0(Fall 2002), pages 41-110, August.
- Jim F. Couch & Keith E. Atkinson & William H. Wells, 1998. "New Deal Agricultural Appropriations: A Political Influence," Eastern Economic Journal, Eastern Economic Association, vol. 24(2), pages 137-148, Spring.
- repec:fth:harver:1418 is not listed on IDEAS
- Aschauer, David Alan, 1989.
"Is public expenditure productive?,"
Journal of Monetary Economics,
Elsevier, vol. 23(2), pages 177-200, March.
- John G. Fernald, 1999.
"Roads to Prosperity? Assessing the Link between Public Capital and Productivity,"
American Economic Review,
American Economic Association, vol. 89(3), pages 619-638, June.
- John G. Fernald, 1997. "Roads to prosperity? assessing the link between public capital and productivity," International Finance Discussion Papers 592, Board of Governors of the Federal Reserve System (U.S.).
- Marilyn Young & Michael Reksulak & William F. Shughart, 2001. "The Political Economy of the IRS," Economics and Politics, Wiley Blackwell, vol. 13(2), pages 201-220, 07.
- Harold L. Cole & Lee E. Ohanian, 2001.
"New Deal policies and the persistence of the Great Depression: a general equilibrium analysis,"
597, Federal Reserve Bank of Minneapolis.
- Harold L. Cole & Lee E. Ohanian, 2004. "New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 779-816, August.
- J. Bradford De Long & Lawrence H. Summers, . "How Does Macroeconomic Policy Matter?," J. Bradford De Long's Working Papers _130, University of California at Berkeley, Economics Department.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:8108. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.