Measuring the Effects of Credit Market Imperfections: A US Farmland Application
AbstractAgricultural credit market imperfections affect the dynamics of the farming sector, farmers' debt leverage, entry and exit. The question is to what extent these effects translate into amplified land price fluctuations. Real U.S. farmland prices tripled in the Seventies; they returned to their early Seventies value during the Eighties. The boom period appears to have been triggered by a sudden decrease in the real cost of borrowing and high expectations for the marketing of U.S. agricultural output. The unexpected rise in interest rates of the early Eighties started the bust period, as well as an unprecedented debt crisis in the farming sector. The main reason for farmland sales in the Eighties became financial difficulty, whereas land is generally sold due to the death or retirement of a farmer. This paper investigates how land price fluctuations interact with entry/exit and debt leverage of firms. In particular, we measure the contribution of a collateral requirement is found to be critical to match observed patterns of the volume of transaction, methods of payment, reasons for sale, farm closures and of the distribution of the debt across firms. However, it does not have a significant impact on land price fluctuations.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0288.
Date of creation: Mar 1996
Date of revision:
Contact details of provider:
Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.