Farm prices plummet and borrowing rises after monetary policy shocks.
The study looks at how changes in monetary policy affect the farm sector in the US. It examines two ways this can happen: through changes in farm prices and through changes in the amount of money farmers can borrow. The researchers used a model to show that when monetary policy tightens, farm prices drop initially. They also found that after a tightening of monetary policy, farmers borrow more money for about a year before reducing their borrowing. This shows that monetary policy changes can have lasting effects on the farm sector.