TY - JOUR AU - Fishback,Price V. AU - Horrace,William C. AU - Kantor,Shawn TI - The Impact of New Deal Expenditures on Local Economic Activity: An Examination of Retail Sales, 1929-1939 JF - National Bureau of Economic Research Working Paper Series VL - No. 8108 PY - 2001 Y2 - February 2001 UR - http://www.nber.org/papers/w8108 L1 - http://www.nber.org/papers/w8108.pdf N1 - Author contact info: Price V. Fishback Department of Economics University of Arizona Tucson, AZ 85721 Tel: 520/621-4421 Fax: 520/621-8450 E-Mail: pfishback@eller.arizona.edu William Horrace Center for Policy Research 426 Eggers Hall Syracuse University Syracuse, NY 13244-1020 Tel: 315/443-9061 Fax: 315/443-1081 E-Mail: whorrace@maxwell.syr.edu Shawn E. Kantor Department of Economics Rensselaer Polytechnic Institute Sage Laboratory, 3404 110 Eighth Street Troy, NY 12180 Tel: 518-276-3925 E-Mail: kantos@rpi.edu AB - **Revised version 2005**

This paper empirically examines the New Deal's impact on local economic activity, as measured by retail sales, during the 1930s. Using a recently-uncovered data set that describes over 30 federal New Deal spending, loan, and mortgage insurance programs across all U.S. counties from 1933 to 1939, we estimate how the various New Deal programs that were designed to accomplish different objectives influenced retail spending. Our empirical approach accounts for both the simultaneity between New Deal allocations and economic activity and the geographic spillovers that likely resulted when spending in one county may have affected the economies of its neighbors. We find that New Deal spending on public works tended to promote retail sales in both the county where the money was spent and in contiguous neighbors, while spending on work relief increased economic activity in the county where the money was spent but at the expense of neighboring counties. Agricultural spending that limited production was associated with lower retail spending. New Deal loan programs appear to have had little or a somewhat negative effect. Finally, increases in the value of mortgages insured by the Federal Housing Administration had a strong positive effect on local economic growth during the Depression. ER -