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Working Paper 2005-013B

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"Why Did Income Growth Vary Across States During the Great Depression?"
by Thomas A. Garrett, and David C. Wheelock

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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Category > Applied Econometrics
Category > Applied Microeconomics
Category > Regional Economics
Author > Thomas A. Garrett
Author > David C. Wheelock