The impact of credit supply on asset prices is one of the central puzzles in finance, given the simultaneous causal effects of credit and asset prices. In this paper, we provide a clean identification of the causal effect of credit supply on farmland values with a difference-in-differences approach. In the past decade, farmland values skyrocketed in the U.S. Heartland due in large to the increased demand for corn induced by ethanol policy. We compare changes in farmland values before and after the ethanol boom, for counties with low and high credit supply. We find a large negative and statistically significant impact of low credit supply on farmland values during the ethanol boom.


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