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Machinery Investment Decisions: A Simulated Analysis For Cash Grain Farms


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  • Gustafson, Cole R.
  • Barry, Peter J.
  • Sonka, Steven T.


A combination of experimental and simulation procedures identify important factors in an Illinois cash grain farmerÂ’s machinery investment decisions. In an experiment setting, a panel of farmers based investment decisions on their own expectations, farm situations, and varying policy scenarios. In general, the results show investment levels statistically related to the tenure and leverage of operators, the economic conditions they faced, and the age of existing machinery. Alternative public policies of lower commodity price supports, tax reform, and interest rate subsidies influenced the timing of purchases but did not alter total investment amounts.

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Bibliographic Info

Article provided by Western Agricultural Economics Association in its journal Western Journal of Agricultural Economics.

Volume (Year): 13 (1988)
Issue (Month): 02 (December)

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Handle: RePEc:ags:wjagec:32105

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Keywords: Crop Production/Industries; Farm Management;


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  1. Simon, Herbert A., 1984. "On the behavioral and rational foundations of economic dynamics," Journal of Economic Behavior & Organization, Elsevier, vol. 5(1), pages 35-55, March.
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Cited by:
  1. Micheels, Eric T. & Katchova, Ani L. & Barry, Peter J., 2004. "Machinery Investment in Illinois: A Study Examining Existing Investment Motivations," 2004 Annual meeting, August 1-4, Denver, CO 20374, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Cole R. Gustafson & Peter J. Barry & Steven T. Sonka, 1990. "Utilizing expectations to measure economic depreciation and capital gains of farm machinery," Agribusiness, John Wiley & Sons, Ltd., vol. 6(5), pages 489-503.
  3. Gustafson, Cole R., 1989. "Stochastic Dynamic Modeling: An Aid To Agricultural Lender Decision Making," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(01), July.
  4. LeBlanc, Michael & Hrubovcak, James & Durst, Ron L. & Conway, Roger K., 1992. "Farm Machinery Investment And The Tax Reform Act Of 1986," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(01), July.
  5. Hadrich, Joleen C. & Larsen, Ryan A. & Olson, Frayne E., 2012. "Incentives for Machinery Investment," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124897, Agricultural and Applied Economics Association.
  6. Lajili, Kaouthar & Barry, Peter J. & Sonka, Steven T. & Mahoney, Joseph T., 1997. "Farmers' Preferences For Crop Contracts," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 22(02), December.


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