Long-term Impacts of Global Food Crisis on Production Decisions: Evidence from Farm Investments in Indonesia
AbstractDid the rise in food prices have a long-term impact on agricultural production? Using household-level panel data from seven provinces of Indonesia, we examine whether the 2007-08 food price crisis triggered farm investments. Empirical results show that (i) the food price crisis created a forward-looking incentive to invest, which can increase farm productivity in the long run, (ii) the expectation formation plays an important role in determining the impact, and (iii) the impact differs by the initial wealth; the positive price shock relaxed liquidity constraints among the poor. Implications on inequalities in income and productivity are discussed.
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Bibliographic InfoPaper provided by Agricultural and Applied Economics Association in its series 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. with number 149673.
Date of creation: Jan 2013
Date of revision:
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Productive investment; Expectation; Anticipated shock; Liquidity constraint; Community/Rural/Urban Development; Risk and Uncertainty; D22; O12; Q12;
Other versions of this item:
- Nose, Manabu & Yamauchi, Futoshi, 2012. "Long-term impacts of global food crisis on production decisions : evidence from farm investments in Indonesia," Policy Research Working Paper Series 6065, The World Bank.
- D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-06-24 (Agricultural Economics)
- NEP-ALL-2013-06-24 (All new papers)
- NEP-DEV-2013-06-24 (Development)
- NEP-SEA-2013-06-24 (South East Asia)
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