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Asset Fixity and Investment Asymmetry in Agriculture

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  • Carl H. Nelson
  • John B. Braden
  • Jae-Sun Roh

Abstract

Fixed asset theory implies that it is more difficult to dispose of capital specific to agricultural production than to add to the stock of specialized capital. This theory is tested by determining whether transitions between states of disinvestment are as likely as transitions between states of investment. Of the twenty-four annual capital stock series analyzed, evidence of asymmetry between investment and disinvestment is strong in eight cases, weak in four, and insignificant in twelve. There is considerable, although mixed, evidence of asymmetry for tractors (farm and nonfarm) and other specialized vehicles since World War II and for agricultural machinery.

Suggested Citation

  • Carl H. Nelson & John B. Braden & Jae-Sun Roh, 1989. "Asset Fixity and Investment Asymmetry in Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(4), pages 970-979.
    • Handle: RePEc:oup:ajagec:v:71:y:1989:i:4:p:970-979.
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    File URL: http://hdl.handle.net/10.2307/1242673
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    Cited by:

    1. Arboleda, Xavier & Bermúdez-Barrezueta, Natalia & Camino-Mogro, Segundo, 2022. "Production and enterprise profitability in Ecuador’s crop-growing sector," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    2. Jana LOSOSOVÁ & Radek ZDENĚK & Jaroslav SVOBODA, 2020. "Tangible fixed assets in Czech small and middle-sized farms Abstract: The aim of this paper is to analyse the development, structure and efficiency of tangible fixed assets in the Czech farms and iden," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 11, pages 236-251, June.
    3. Brenda L. Boetel & Ruben Hoffmann & Donald J. Liu, 2007. "Estimating Investment Rigidity within a Threshold Regression Framework: The Case of U.S. Hog Production Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(1), pages 36-51.
    4. Lin, Ni & Shumway, C. Richard, 2000. "Asset Fixity In U.S. Agriculture: Robustness To Functional Form," Ag Econ Series 12967, Washington State University, School of Economic Sciences.
    5. Richards, Timothy J., 1996. "Economic Hysteresis And The Effects Of Output Regulation," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(1), pages 1-17, July.

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