Investment reluctance: irreversibility or imperfect capital markets?
AbstractLow investment rates are a puzzling phenomenon particularly in transition economies with an urgent need for modernisation. The literature offers two alternative explanations: imperfect capital markets and investment reluctance due to real options effects. In this paper, we develop a generalised model that combines both aspects. The econometric implementation has the structure of a generalised Tobit model. Applying this model to German farm-level panel data, we show that ignoring real option effects may lead to erroneous conclusions in the context of empirical investment equations. Oxford University Press and Foundation for the European Review of Agricultural Economics 2010; all rights reserved. For permissions, please email firstname.lastname@example.org, Oxford University Press.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Foundation for the European Review of Agricultural Economics in its journal European Review of Agricultural Economics.
Volume (Year): 37 (2010)
Issue (Month): 1 (March)
Contact details of provider:
Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
Fax: 01865 267 985
Web page: http://www.erae.oupjournals.org/
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- O'Toole, Conor M. & Newman, Carol F. & Hennessy, Thia C., 2011. "The role of financing frictions in agricultural investment decisions: an analysis pre and post financial crisis," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114568, European Association of Agricultural Economists.
- Guastella, G. & Moro, D. & Sckokai, P. & Veneziani, M., 2013.
"CAP Effects on Agricultural Investment Demand in Europe,"
Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain
152256, International Agricultural Trade Research Consortium.
- Guastella, G. & Moro, D. & Sckokai, P. & Veneziani, M., 2013. "CAP Effects on Agricultural Investment Demand in Europe," 2013 Second Congress, June 6-7, 2013, Parma, Italy 149758, Italian Association of Agricultural and Applied Economics (AIEAA).
- Guastella, G. & Moro, D. & Sckokai, P. & Veneziani, M., 2013. "CAP Effects on Agricultural Investment Demand in Europe," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150619, Agricultural and Applied Economics Association.
- Huettel, Silke & Narayana, Rashmi & Odening, Martin, 2011. "Measuring dynamic efficiency under uncertainty," Structural Change in Agriculture/Strukturwandel im Agrarsektor (SiAg) Working Papers 129062, Humboldt University Berlin, Department of Agricultural Economics.
- Rizov, Marian & Pokrivcak, Jan & Ciaian, Pavel, 2012. "CAP subsidies and productivity of the EU farms," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 124970, International Association of Agricultural Economists.
- Rizov, Marian & Pokrivcak, Jan & Ciaian, Pavel, 2013. "CAP Subsidies and the Productivity of EU Farms," Factor Markets Working Papers 148, Centre for European Policy Studies.
- Moro, Daniele & Sckokai, Paolo, 2011. "The impact of pillar I support on farm choices: conceptual and methodological challenges," 122nd Seminar, February 17-18, 2011, Ancona, Italy 99836, European Association of Agricultural Economists.
- Sahrbacher, Christoph & Sahrbacher, Amanda & Ostermeyer, Arlette, 2013. "Simulation Results of AgriPoliS about Diminishing Capital Subsidies and Restrictions," Factor Markets Working Papers 167, Centre for European Policy Studies.
- Guastella,Giovanni & Moro, Daniele & Sckokai, Paolo & Veneziani, Mario, 2013. "Investment behaviour of EU arable crop farms in selected EU countries and the impact of policy reforms," Factor Markets Working Papers 154, Centre for European Policy Studies.
- Jakob Vesterlund Olsen & Arne Henningsen, 2011. "Investment Utilisation, Adjustment Costs, and Technical Efficiency in Danish Pig Farms," IFRO Working Paper 2011/13, University of Copenhagen, Department of Food and Resource Economics.
- Tubetov, Dulat & Musshoff, Oliver & Kellner, Ulla, 0. "Investments in Kazakhstani Dairy Farming: A Comparison of Classical Investment Theory and the Real Options Approach," Quarterly Journal of International Agriculture, Humboldt-Universität zu Berlin, vol. 51.
- Guastella, Giovanni & Moro, Daniele & Sckokai, Paolo & Veneziani, Mario, 2013. "Simulation Results on the Impact of Changes in the Main EU Policy Tools on Farm Investment Behaviour," Factor Markets Working Papers 168, Centre for European Policy Studies.
- Petrick, Martin & Kloss, Mathias, 2012. "Drivers of agricultural capital productivity in selected EU member states," Factor Markets Working Papers 137, Centre for European Policy Studies.
- Maart, Syster Christin & Musshoff, Oliver, 2011. "Optimal Timing of Farmland Investment - An Experimental Study on Farmers' Decision Behavior -," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103693, Agricultural and Applied Economics Association.
- Conor M. O'Toole & Carol Newman & Thia Hennessy, 2011. "The role of investment, fundamental Q and financing frictions in agricultural investment decisions: an analysis pre and post financial crisis," Working Papers 1101, Rural Economy and Development Programme,Teagasc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.