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25 July 2017
A study by Gustavo S. Cortes and Marc D. Weidenmier suggests that the largest stock volatility spike in American history, which occurred during the Great Depression, can largely be accounted for by an increase in the volatility of building permit growth in 1928-38. Markets appear to have factored in a forthcoming economic disaster based on uncertainty about growth based on future expected rents.
24 July 2017
In a study of targeted debt relief, Will Dobbie and Jae Song find that providing borrowers with long-term debt write-downs significantly improved both financial and labor market outcomes, even though these write-downs do not take effect for three to five years. Immediate payment reductions that increased short-run liquidity had no positive effects.
21 July 2017
Exploiting county-level variation arising from random weather shocks during the 1980s farm debt crisis, Nittai K. Bergman, Rajkamal Iyer, and Richard T. Thakor show that cash injections during the crisis positively affected land markets, the financial sector, and labor markets, and ultimately translated into increases in county-level per-capita income. A one dollar cash injection on average raised county income by $1.63.
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When Interest Rate Was Near Zero Lower Bound,