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Risk and the National Industrial Recovery Act: An Empirical Evaluation

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  • William Anderson

Abstract

This paper examines the National Industrial Recovery Act of 1933 to see if the law helped “stabilize” the U.S. economy during the Great Depression. The test measures sample variances of the rates of return in stock price indices for six major U.S. industries as well as the overall stock market and compares those variances across five time periods. The statistics reveal that the NIRA did not reduce risks faced by these firms. Stocks for NIRA-regulated industries did not significantly decline in risk during the NIRA period, as compared with sample variance changes elsewhere during the Great Depression. The paper then interprets the results from a public choice point of view. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • William Anderson, 2000. "Risk and the National Industrial Recovery Act: An Empirical Evaluation," Public Choice, Springer, vol. 103(1), pages 139-161, April.
    • Handle: RePEc:kap:pubcho:v:103:y:2000:i:1:p:139-161
    DOI: 10.1023/A:1005054019819
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    References listed on IDEAS

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    1. Alexander, Barbara J., 1997. "Failed Cooperation in Heterogeneous Industries Under the National Recovery Administration," The Journal of Economic History, Cambridge University Press, vol. 57(2), pages 322-344, June.
    2. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    3. Gary Anderson & William Shughart & Robert Tollison, 1988. "A public choice theory of the great contraction," Public Choice, Springer, vol. 59(1), pages 3-23, October.
    4. Ackert, Lucy F., 1994. "Uncertainty and volatility in stock prices," Journal of Economics and Business, Elsevier, vol. 46(4), pages 239-253, October.
    5. Brown, Stephen J. & Warner, Jerold B., 1980. "Measuring security price performance," Journal of Financial Economics, Elsevier, vol. 8(3), pages 205-258, September.
    6. Ross, Thomas W, 1984. "Winners and Losers under the Robinson-Patman Act," Journal of Law and Economics, University of Chicago Press, vol. 27(2), pages 243-271, October.
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