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Did 1933 new deal legislation contribute to farm real estate values: A regional analysis

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Listed:
  • Shaik, Saleem
  • Atwood, Joseph A.
  • Helmers, Glenn A.

Abstract

The proportion of land values generated by farm program payments and farm returns are examined using an extended income capitalization model. The extended income capitalization model addresses the identification issue introduced by the counter-cyclical nature of farm program payments and farm returns. Procedures are presented that allow the estimation of agriculture land value shares without requiring explicit knowledge or assumptions with respect to the net land rental shares of farm returns or farm program payments. Results from the panel recursive or triangular-structure simultaneous equation model applied to 48 states in the U.S. for the period 1938–2010 indicate on average 24–29.2 percent and 76–70.8 percent of the agricultural land values can be identified with farm program payments and farm returns, respectively. Spatially, at the resource regional level the contribution of farm program payments was as low as 20.5 percent in the Eastern Upland region compared to a high of 69 percent in the Mississippi Seaboard region.

Suggested Citation

  • Shaik, Saleem & Atwood, Joseph A. & Helmers, Glenn A., 2012. "Did 1933 new deal legislation contribute to farm real estate values: A regional analysis," Journal of Policy Modeling, Elsevier, vol. 34(6), pages 801-816.
  • Handle: RePEc:eee:jpolmo:v:34:y:2012:i:6:p:801-816
    DOI: 10.1016/j.jpolmod.2012.10.001
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    References listed on IDEAS

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    1. Sumner, Daniel A., 2003. "Implications of the US Farm Bill of 2002 for agricultural trade and trade negotiations," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(1), March.
    2. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
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    5. Watts, Myles J. & Helmers, Glenn A., 1981. "Machinery Costs And Inflation," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 6(02), December.
    6. Shaik, Saleem, 2007. "Farm Programs And Land Values In Mountain States: Alternative Panel Estimators," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 10256, Western Agricultural Economics Association.
    7. Alfons Weersink & Steve Clark & Calum G. Turvey & Rakhal Sarker, 1999. "The Effect of Agricultural Policy on Farmland Values," Land Economics, University of Wisconsin Press, vol. 75(3), pages 425-439.
    8. Barry K. Goodwin & François Ortalo-Magné, 1992. "The Capitalization of Wheat Subsidies into Agricultural Land Values," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 40(1), pages 37-54, March.
    9. Charles H. Barnard & Gerald Whittaker & David Westenbarger & Mary Ahearn, 1997. "Evidence of Capitalization of Direct Government Payments into U.S. Cropland Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(5), pages 1642-1650.
    10. Gardner, Bruce L, 1987. "Causes of U.S. Farm Commodity Programs," Journal of Political Economy, University of Chicago Press, vol. 95(2), pages 290-310, April.
    11. Saleem Shaik & Glenn A. Helmers & Joseph A. Atwood, 2005. "The Evolution of Farm Programs and Their Contribution to Agricultural Land Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1190-1197.
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    More about this item

    Keywords

    Farm programs payments; Land values; Extended income capitalization model; Panel recursive/triangular structure simultaneous equation model; Resource regional analysis; U.S. state-level data; 1938–2010;

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land

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