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Asset Bubbles, Inflation, and Agricultural Land Values

Author

Listed:
  • Schurle, Bryan
  • Wilson, Christine
  • Featherstone, Allen
  • Remaury, Hugo
  • Harmon, Jacob

Abstract

This article discusses asset bubbles, the Kansas and Illinois land markets, estimates land values, and develops a land price/earnings ratio. Current land sales data are also examined. Finally, we examine relationships between land values and interest rates, inflation rates, and cash rents. Results show that real land values increase substantially when inflation increases. Recent land values are explored for both Kansas and Illinois with somewhat differing results. Development of land price bubbles could be enhanced if inflation becomes more widespread and land values are viewed as having good protection from inflation. Market fundamentals would suggest that an increase in land prices due to inflation occurs because of an increase in cash rental rates and not through a dramatic change in the price earnings ratio.

Suggested Citation

  • Schurle, Bryan & Wilson, Christine & Featherstone, Allen & Remaury, Hugo & Harmon, Jacob, 2012. "Asset Bubbles, Inflation, and Agricultural Land Values," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2012, pages 1-13.
    • Handle: RePEc:ags:jasfmr:190731
    DOI: 10.22004/ag.econ.190731
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    File URL: https://ageconsearch.umn.edu/record/190731/files/373_2_Schurle.pdf
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    References listed on IDEAS

    as
    1. Smith,Vernon L., 2005. "Bargaining and Market Behavior," Cambridge Books, Cambridge University Press, number 9780521021487.
    2. Shultz, Steven, 2006. "Differences Between Agricultural Land Value Surveys and Market Sales," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2006, pages 1-8.
    3. Smith, Vernon L & Suchanek, Gerry L & Williams, Arlington W, 1988. "Bubbles, Crashes, and Endogenous Expectations in Experimental Spot Asset Markets," Econometrica, Econometric Society, vol. 56(5), pages 1119-1151, September.
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    Cited by:

    1. Uzair Hassan Khan & Muhammad Daniyal Imran, 2023. "Relationship between Inflation and Other Macro Economics Factors: Comparative Study of Germany, Japan and New Zealand," Journal of Economic Impact, Science Impact Publishers, vol. 5(1), pages 76-87.
    2. Schurle, Bryan & Featherstone, Allen & Wilson, Christine & Crossan, Dylan, 2013. "Land Prices During Periods of Rapid Change," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2013, pages 1-13, June.

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