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The Anatomy of a Credit Crisis: The Boom and Bust in Farm Land Prices in the United States in the 1920s

The American economic review, 2015-04, Vol.105 (4), p.1439-1477 [Peer Reviewed Journal]

Copyright© 2015 American Economic Association ;Copyright American Economic Association Apr 2015 ;ISSN: 0002-8282 ;EISSN: 1944-7981 ;DOI: 10.1257/aer.20120525 ;CODEN: AENRAA

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Title:
The Anatomy of a Credit Crisis: The Boom and Bust in Farm Land Prices in the United States in the 1920s
Author: Rajan, Raghuram ; Ramcharan, Rodney
Subjects: 20th century ; Agricultural commodities ; Agricultural land ; Agricultural production ; Asset pricing ; Availability ; Bank credit ; Bank failures ; Bank loans ; Banking regulation ; Banks ; Commercial banks ; Commercial credit ; Credit ; Credit market ; Economic theory ; Farms ; Great Depression ; Inflation ; Land ; Land prices ; Mortgages ; National banks ; Prices ; Regulation ; Regulatory policy ; State banks ; Statistical analysis ; Supervision ; U.S.A ; Unit banking ; World War I
Is Part Of: The American economic review, 2015-04, Vol.105 (4), p.1439-1477
Description: Does credit availability exacerbate asset price inflation? Are there long-run consequences? During the farm land price boom and bust before the Great Depression, we find that credit availability directly inflated land prices. Credit also amplified the relationship between positive fundamentals and land prices, leading to greater indebtedness. When fundamentals soured, areas with higher credit availability suffered a greater fall in land prices and had more bank failures. Land prices and credit availability also remained disproportionately low for decades in these areas, suggesting that leverage might render temporary credit-induced booms and busts persistent. We draw lessons for regulatory policy.
Publisher: Nashville: American Economic Association
Language: English
Identifier: ISSN: 0002-8282
EISSN: 1944-7981
DOI: 10.1257/aer.20120525
CODEN: AENRAA
Source: AUTh Library subscriptions: ProQuest Central

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The Anatomy of a Credit Crisis: The Boom and Bust in Farm Land Prices in the United States in the 1920s

Copyright© 2015 American Economic Association ;Copyright American Economic Association Apr 2015 ;ISSN: 0002-8282 ;EISSN: 1944-7981 ;DOI: 10.1257/aer.20120525 ;CODEN: AENRAA

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