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Farmland Price Behavior And Credit Allocation

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  • Shalit, Haim
  • Schmitz, Andrew

Abstract

A model of farmland accumulation analyzes the impact of credit allocation and the level of debt on farmland prices. The model stresses the importance of the real net wealth accumulated by the farming sector on the lending procedures for farmland purchases. It is shown that credit allocated on the basis of wealth not only increases farmland prices but also destabilizes them. The paper presents the model of individual accumulation to derive the farmland price equation whose dynamic properties are analyzed. A study of U.S. farmland data supports the theoretical results.

Suggested Citation

  • Shalit, Haim & Schmitz, Andrew, 1984. "Farmland Price Behavior And Credit Allocation," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 9(2), pages 1-11, December.
    • Handle: RePEc:ags:wjagec:32131
    DOI: 10.22004/ag.econ.32131
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    References listed on IDEAS

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    1. Reinsel, Robert & Reinsel, Edward, 1979. "The Economics of Asset Values and Current Income in Farming," 1979 Annual Meeting, July 29-August 1, Pullman, Washington 278182, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Peter J. Barry, 1980. "Capital Asset Pricing and Farm Real Estate," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 549-553.
    3. Emanuel Melichar, 1979. "Capital Gains versus Current Income in the Farming Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(5), pages 1085-1092.
    4. Pope, Rulon D. & Kramer, Randall A. & Green, Richard D. & Gardner, B. Delworth, 1979. "An Evaluation Of Econometric Models Of U.S. Farmland Prices," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 4(1), pages 1-14, July.
    5. James S. Plaxico & Darrel D. Kletke, 1979. "The Value of Unrealized Farm Land Capital Gains," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(2), pages 327-330.
    6. Chavas, Jean-Paul & Shumway, C. Richard, 1982. "A Pooled Time-Series Cross-Section Analysis Of Land Prices," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 7(1), pages 1-12, July.
    7. Robert D. Reinsel & Edward I. Reinsel, 1979. "The Economics of Asset Values and Current Income in Farming," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(5), pages 1093-1097.
    8. Haim Shalit & Andrew Schmitz, 1982. "Farmland Accumulation and Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(4), pages 710-719.
    9. Dorfman, Robert, 1969. "An Economic Interpretation of Optimal Control Theory," American Economic Review, American Economic Association, vol. 59(5), pages 817-831, December.
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    Cited by:

    1. Cortney Cowley & Ani L. Katchova & Ana Claudia Sant'Anna, 2020. "Examining the Relationships between Land Values and Credit Availability," Economic Review, Federal Reserve Bank of Kansas City, May.
    2. Janssen, Larry L. & Haque, Mohammed Z., 1987. "Determining factors in South Dakota Farmland Market Prices 1976-1984," Bulletin 232119, South Dakota State University, Agricultural Experiment Station.
    3. Sant’Anna, Ana Claudia & Cowley, Cortney & Katchova, Ani L., 2021. "Examining the Relationship between Land Values and Credit Availability," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 53(2), pages 209-228, May.
    4. Love, H. Alan & Karp, Larry, 1988. "The Effect of Anticipated Farm Failure on the.Agricultural Land Market," 1988 Annual Meeting, August 1-3, Knoxville, Tennessee 270186, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. B. James Deaton & Chad Lawley, 2022. "A survey of literature examining farmland prices: A Canadian focus," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 70(2), pages 95-121, June.

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    Keywords

    Agricultural Finance; Land Economics/Use;

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