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Did New Deal Grant Programs Stimulate Local Economies? A Study of Federal Grants and Retail Sales During the Great Depression

Published online by Cambridge University Press:  15 March 2005

PRICE V. FISHBACK
Affiliation:
Frank and Clara Kramer Professor of Economics, University of Arizona, Tucson, AZ 85721, and Research Associate, National Bureau of Economic Research, Cambridge, MA. E-mail: pfishback@eller.arizona.edu.
WILLIAM C. HORRACE
Affiliation:
Associate Professor of Economics, Syracuse University, Syracuse, New York 13244, and Research Economist, National Bureau of Economic Research. E-mail: whorrace@maxwell.syr.edu.
SHAWN KANTOR
Affiliation:
Professor of Economics, University of California, Merced, Merced, CA 95344, and Research Associate, National Bureau of Economic Research. E-mail: skantor@ucmerced.edu.

Abstract

Using data on New Deal grants to each U.S. county from 1933 to 1939, we estimate how relief and public works spending and payments to farmers through the Agricultural Adjustment Administration influenced retail consumption. On a per capita basis, we find that an additional dollar of public works and relief spending was associated with a 44 cent increase in 1939 retail sales. In contrast, the AAA seems to have had a negative effect on retail sales, suggesting that nonlandowners in the farm sector suffered disproportionate declines in income as a result of the AAA.

Type
ARTICLES
Copyright
© 2005 The Economic History Association

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