IDEAS home Printed from https://ideas.repec.org/a/bla/jageco/v46y1995i3p371-380.html
   My bibliography  Save this article

Farm Household Production In The Presence Of Restrictions On Debt: Theory And Policy Implications

Author

Listed:
  • Euan Phimister

Abstract

In this paper a two period life cycle model of the farm household is constructed allowing for production and restrictions on debt in which the consumption and production decisions of the farm household are simultaneous. It is shown that the farm household's production responses to exogenous changes may be qualitatively different to that predicted by the profit‐maximising model when all markets are perfect. In particular, when the household is debt constrained, ‘perverse’ output effects are possible with output increasing in response to output price decreases. Further, for such households, compensation payments will have production effects. Finally, the financial situation of the farm has an impact on production for debt constrained farms.

Suggested Citation

  • Euan Phimister, 1995. "Farm Household Production In The Presence Of Restrictions On Debt: Theory And Policy Implications," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(3), pages 371-380, September.
    • Handle: RePEc:bla:jageco:v:46:y:1995:i:3:p:371-380
    DOI: 10.1111/j.1477-9552.1995.tb00783.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1477-9552.1995.tb00783.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1477-9552.1995.tb00783.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Elhorst, J Paul, 1993. "The Estimation of Investment Equations at the Farm Level," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 20(2), pages 167-182.
    2. Phimister, Euan, 1995. "The Impact of Borrowing Constraints on Farm Households: A Life-Cycle Approach," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 22(1), pages 61-86.
    3. France Caillavet & Herve Guyomard & Robert Lifran & . Esr. Département d'Economie Et Sociologie Ruralesivry, 1994. "Agricultural household modelling and family economics [[Modélisation des ménages agricoles et économie de la famille]]," Post-Print hal-02846786, HAL.
    4. Dwight M. Jaffee & Thomas Russell, 1976. "Imperfect Information, Uncertainty, and Credit Rationing," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(4), pages 651-666.
    5. 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.
    6. Brase, Brian T. & LaDue, Eddy L., 1989. "Farmer Investment Behavior: A Review of Literature," Research Bulletins 183306, Cornell University, Department of Applied Economics and Management.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Frederic Courleux & Herve Guyomard & Fabrice Levert, 2007. "Étude prospective sur le fonctionnement des marchés des droits au paiement et de la réserve nationale mis en place dans le cadre de la réforme de la PAC de juin 2003," Working Papers hal-01595356, HAL.
    2. Kassoum Ayouba & Jean-Philippe Boussemart & Stéphane Vigeant, 2017. "The impact of single farm payments on technical inefficiency of French crop farms," Review of Agricultural, Food and Environmental Studies, Springer, vol. 98(1), pages 1-23, July.
    3. Dingde Xu & Zhixing Ma & Xin Deng & Yi Liu & Kai Huang & Wenfeng Zhou & Zhuolin Yong, 2020. "Relationships between Land Management Scale and Livelihood Strategy Selection of Rural Households in China from the Perspective of Family Life Cycle," Land, MDPI, vol. 9(1), pages 1-15, January.
    4. Fabienne Femenia & Alexandre Gohin & Alain Carpentier, 2010. "The Decoupling of Farm Programs: Revisiting the Wealth Effect," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 836-848.
    5. Bascou, Pierre & Londero, Pierluigi & Munch, Wolfgang, 2004. "Reform and Adjustment in the European Union: The 2003 Reform of the Common Agricultural Policy and Enlargement," IAPRAP\IATRC Summer Symposium, Adjusting to Domestic and International Agricultural Reform in Industrial Countries, June 6-7, 2004, Philadelphia, PA, 15769, International Agricultural Policy Reform and Adjustment Project (IAPRAP).
    6. Carpentier, Alain & Gohin, Alexandre & Heinzel, Christoph, 2012. "Production Effects of Direct Payments to Active Farmers: a Microeconomic Dynamic and Stochastic Analysis," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122447, European Association of Agricultural Economists.
    7. Hervé Guyomard & Louis-Pascal Mahé, 1995. "La nouvelle instrumentation de la politique agricole commune," Économie et Prévision, Programme National Persée, vol. 117(1), pages 15-29.
    8. Hervé Guyomard & Alexandre Gohin & Chantal Le Mouël, 2001. "Instruments de soutien interne des revenus agricoles, effets de distorsion sur les échanges et multifonctionnalité de l'agriculture," Post-Print hal-01937091, HAL.
    9. Abdul-Salam, Yakubu & Phimister, Euan, 2019. "Modelling the impact of market imperfections on farm household investment in stand-alone solar PV systems," World Development, Elsevier, vol. 116(C), pages 66-76.
    10. James Rude, 2008. "Production Effects of the European Union's Single Farm Payment," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(4), pages 457-471, December.
    11. Mary, Sebastien & Santini, Fabien & Boulanger, Pierre, 2013. "An Ex-Ante Assessment of CAP Income Stabilisation Payments using a Farm Household Model," 87th Annual Conference, April 8-10, 2013, Warwick University, Coventry, UK 158860, Agricultural Economics Society.
    12. Harris, James Michael & Dillard, John & Erickson, Kenneth W. & Hallahan, Charles B., 2009. "Changes in Debt Patterns and Financial Structure of Farm Businesses: A Double Hurdle Approach," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49402, Agricultural and Applied Economics Association.
    13. Abdul-Salam, Yakubu & Phimister, Euan, 2014. "Modelling the Impact of Market Imperfections on Farm Household Investment in Stand-Alone Solar PV," 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France 169742, Agricultural Economics Society.
    14. Harris, James Michael & Blank, Steven C. & Erickson, Kenneth W. & Hallahan, Charles B., 2010. "Off-farm Income and Investments in Farm Assets: A Double Hurdle Approach," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61531, Agricultural and Applied Economics Association.
    15. Roel Jongeneel & Ana Gonzalez-Martinez, 2022. "EU Dairy after the Quota Abolition: Inelastic Asymmetric Price Responsiveness and Adverse Milk Supply during Crisis Time," Agriculture, MDPI, vol. 12(12), pages 1-16, November.
    16. Rude, James, 2007. "Production Effects of the European Union’s Single Farm Payment," Working Papers 7335, Canadian Agricultural Trade Policy Research Network.
    17. Serra, Teresa & Zilberman, David & Goodwin, Barry K. & Hyvonen, Keijo, 2004. "Replacement Of Price Support Measures By Direct Payments In Agricultural Policies: Does This Benefit The Environment? The Effects Of The Post-1992 Cap On Pest Control In The E.U," 2004 Annual meeting, August 1-4, Denver, CO 20043, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Yuanyuan & Wigniolle, Bertrand, 2017. "Endogenous information revelation in a competitive credit market and credit crunch," Journal of Mathematical Economics, Elsevier, vol. 68(C), pages 127-141.
    2. Janvier D. Nkurunziza, 2005. "Reputation and Credit without Collateral in Africa`s Formal Banking," Economics Series Working Papers WPS/2005-02, University of Oxford, Department of Economics.
    3. Ingela Alger & Régis Renault, 2006. "Screening Ethics When Honest Agents Care About Fairness ," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(1), pages 59-85, February.
    4. de Rosari, Bernardus Bala & Sinaga, Bonar Marulitua & Kusnadi, Nunung & Sawit, Mohamad Husein, 2014. "The Impact Of Credit And Capital Supports On Economic Behavior Of Farm Households: A Household Economic Approach," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 2(3), pages 1-10, July.
    5. Kong, Dongmin & Pan, Yue & Tian, Gary Gang & Zhang, Pengdong, 2020. "CEOs' hometown connections and access to trade credit: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 62(C).
    6. Kirschenmann, K., 2010. "The Dynamics in Requested and Granted Loan Terms when Bank and Borrower Interact Repeatedly," Other publications TiSEM 40d5005c-1626-4511-aa8a-f, Tilburg University, School of Economics and Management.
    7. DeFusco, Anthony A. & Tang, Huan & Yannelis, Constantine, 2022. "Measuring the welfare cost of asymmetric information in consumer credit markets," Journal of Financial Economics, Elsevier, vol. 146(3), pages 821-840.
    8. Baltezore, James F. & Gustafson, Cole R. & Leistritz, F. Larry, 1992. "Financial Barriers to International Trade in North Dakota," Agricultural Economics Reports 23469, North Dakota State University, Department of Agribusiness and Applied Economics.
    9. repec:zbw:bofrdp:1997_008 is not listed on IDEAS
    10. Duca, John V., 2013. "Did the commercial paper funding facility prevent a Great Depression style money market meltdown?," Journal of Financial Stability, Elsevier, vol. 9(4), pages 747-758.
    11. Ginés Hernández-Cánovas & Pedro Martínez-Solano, 2007. "Effect of the Number of Banking Relationships on Credit Availability: Evidence from Panel Data of Spanish Small Firms," Small Business Economics, Springer, vol. 28(1), pages 37-53, January.
    12. Gorman, Gary G. & Rosa, Peter J. & Faseruk, Alex, 2005. "Institutional lending to knowledge-based businesses," Journal of Business Venturing, Elsevier, vol. 20(6), pages 793-819, November.
    13. Paul Mizen & Cihan Yalcin, 2006. "Monetary Policy, Corporate Financial Composition and Real Activity," CESifo Economic Studies, CESifo Group, vol. 52(1), pages 177-213, March.
    14. Valérie Revest & Alessandro Sapio, 2012. "Financing technology-based small firms in Europe: what do we know?," Small Business Economics, Springer, vol. 39(1), pages 179-205, July.
    15. R. Glenn Hubbard, 1990. "Introduction to "Asymmetric Information, Corporate Finance, and Investment"," NBER Chapters, in: Asymmetric Information, Corporate Finance, and Investment, pages 1-14, National Bureau of Economic Research, Inc.
    16. Gerhard Clemenz & Mona Ritthaler, 1992. "Credit markets with asymmetric information : a survey," Finnish Economic Papers, Finnish Economic Association, vol. 5(1), pages 12-26, Spring.
    17. Falagiarda, Matteo & Saia, Alessandro, 2017. "Credit, Endogenous Collateral and Risky Assets: A DSGE Model," International Review of Economics & Finance, Elsevier, vol. 49(C), pages 125-148.
    18. Gabriele Angori & David Aristei, 2020. "Heterogeneity and state dependence in firms’ access to credit: Microevidence from the euro area," SEEDS Working Papers 0220, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Feb 2020.
    19. Dang, Le Phuong Xuan & Hoang, Viet-Ngu & Nghiem, Son Hong & Wilson, Clevo, 2023. "Social networks with organisational resource, generalised trust and informal loans: Evidence from rural Vietnam," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 388-402.
    20. Kraemer-Eis, Helmut & Lang, Frank & Torfs, Wouter & Gvetadze, Salome, 2016. "European Small Business Finance Outlook: December 2016," EIF Working Paper Series 2016/37, European Investment Fund (EIF).
    21. Goodhart, Charles, 1989. "The Conduct of Monetary Policy," Economic Journal, Royal Economic Society, vol. 99(396), pages 293-346, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jageco:v:46:y:1995:i:3:p:371-380. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0021-857X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.