Working Paper: NBER ID: w14686
Authors: Joseph H. Davis; Christopher Hanes; Paul W. Rhode
Abstract: Most major American industrial business cycles from around 1880 to the First World War were caused by fluctuations in the size of the cotton harvest due to economically exogenous factors such as weather. Wheat and corn harvests did not affect industrial production; nor did the cotton harvest before the late 1870s. The unique effect of the cotton harvest in this period can be explained as an essentially monetary phenomenon, the result of interactions between harvests, international gold flows and high-powered money demand under America's gold-standard regime of 1879-1914.
Keywords: business cycles; cotton harvest; industrial production; monetary phenomena; gold standard
JEL Codes: E32; N11; N51; N61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| cotton harvest fluctuations (N52) | industrial production (L69) |
| cotton harvest fluctuations (N52) | supply of high-powered money (E51) |
| supply of high-powered money (E51) | industrial production (L69) |
| cotton harvest fluctuations (N52) | business cycles (E32) |
| wheat harvests (P32) | industrial production (L69) |
| corn harvests (N52) | industrial production (L69) |