Recovery Spring, Faltering Fall: March to November 1933

Taylor, Jason E.; Neumann, Todd C.

doi:10.1016/j.eeh.2016.03.003

Cited by 24 publications

(19 citation statements)

References 25 publications

(27 reference statements)

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“…We verify in online Appendix A that rapid recovery is a feature not only of the industrial production data, but also of other aggregate economic indicators. Our conclusion that the economy indeed grew extraordinarily rapidly in spring 1933 matches that ofTaylor and Neumann (2016).…”

supporting

confidence: 54%

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Recovery from the Great Depression: The Farm Channel in Spring 1933

Hausman

Rhode

Wieland

2019

American Economic Review

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US industrial production rose 57 percent. We show that an important source of recovery was the effect of dollar devaluation on farm prices, incomes, and consumption. Devaluation immediately raised traded crop prices, and auto sales grew more rapidly in states and counties most exposed to these price increases. The response was amplified in counties with more severe farm debt burdens. For plausible assumptions about farmers' relative MPC, the incidence of higher farm prices, and the aggregate multiplier, this redistribution to farmers accounted for a substantial portion of spring 1933 growth. This farm channel thus provides an example of how the distributional consequences of macroeconomic policies can have large aggregate effects. That recovery in 1933 benefited from redistribution to farmers suggests an important limitation to the use of 1933 as a guide to the effects of monetary regime changes in other circumstances. (JEL E32, E65, N12, N52, Q11, Q12) " [T]he depression in the manufacturing industry of the country is due chiefly to the fact that agricultural products generally have been selling below the cost of production, and thereby destroyed the purchasing power

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supporting

confidence: 54%

“…Recent work on the initial recovery in spring 1933 includes Eggertsson (2008), Jalil and Rua (2016), Sumner (2015), and Taylor and Neumann (2016). These authors credit Roosevelt with inducing inflation expectations and reducing ex ante real interest rates, thus stimulating demand for investment goods and consumer durables.…”

mentioning

confidence: 99%

Recovery from the Great Depression: The Farm Channel in Spring 1933

Hausman

Rhode

Wieland

2019

American Economic Review

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“…We reserve further evaluation of these two competing explanations for future research and direct interested readers to a recent study by Taylor and Neumann (2014), which sheds important insights into the forces behind the setback to the recovery.…”

Section: Discussionmentioning

confidence: 99%

“…127 A new study by Taylor and Neumann (2014) finds evidence that the implementation of a subprogram of the NIRA-the President's Reemployment Act (PRA)-may have played a role in the slowdown. The PRA set minimum wages at 40 cents per hour and reduced maximum workweeks to 35 hours to promote work sharing.…”

Section: After July 1933mentioning

confidence: 99%

“…Third, while our findings indicate that a shift in inflation expectations played a causal role in stimulating the recovery, we cannot claim that the shift in inflation expectations explains the entirety of the recovery. A new study by Taylor and Neumann (2014) discusses and evaluates a variety of potential forces that may have played a role in the recovery. We direct interested readers to their study for further details.…”

mentioning

confidence: 99%

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Inflation Expectations and Recovery from the Depression in 1933: Evidence from the Narrative Record

Jalil

Rua

2015

FEDS

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This paper uses the historical narrative record to determine whether inflation expectations shifted during the second quarter of 1933, precisely as the recovery from the Great Depression took hold. First, by examining the historical news record and the forecasts of contemporary business analysts, we show that inflation expectations increased dramatically. Second, using an event-studies approach, we identify the impact on financial markets of the key events that shifted inflation expectations. Third, we gather new evidence-both quantitative and narrative-that indicates that the shift in inflation expectations played a causal role in stimulating the recovery.JEL Classification: E31, E32, E42, N12

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