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Farm Consumption and Liquidity Constraints

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  • Michael R. Langemeier
  • George F. Patrick

Abstract

This study examines whether farm family consumption is liquidity-constrained. Results, using 1976 to 1990 data for groups of Illinois and Kansas farms, indicate that consumption behavior is not liquidity-constrained. Analysis of 207 Kansas farms in 1989 and 1990 provides similar results. These results are in contrast to findings for nonfarm families, and support the validity of using the life cycle-permanent income hypothesis for farm level modeling and analysis.

Suggested Citation

  • Michael R. Langemeier & George F. Patrick, 1993. "Farm Consumption and Liquidity Constraints," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(2), pages 479-484.
    • Handle: RePEc:oup:ajagec:v:75:y:1993:i:2:p:479-484.
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    File URL: http://hdl.handle.net/10.2307/1242932
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    Cited by:

    1. Chul‐Woo Kwon & Peter F. Orazem & Daniel M. Otto, 2006. "Off‐farm labor supply responses to permanent and transitory farm income," Agricultural Economics, International Association of Agricultural Economists, vol. 34(1), pages 59-67, January.
    2. Orazem, Peter F. & King, Elizabeth M., 2008. "Schooling in Developing Countries: The Roles of Supply, Demand and Government Policy," Handbook of Development Economics, in: T. Paul Schultz & John A. Strauss (ed.), Handbook of Development Economics, edition 1, volume 4, chapter 55, pages 3475-3559, Elsevier.
    3. Williams, David J. & Brewer, Brady E. & Baker, Timothy G. & Wilson, Christine A., 2020. "Consumption-Based Risk Measures of Kansas Farm Households," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304597, Agricultural and Applied Economics Association.
    4. 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.
    5. Woldehanna, Tassew & Oskam, Arie J., 2002. "Are Farmers Completely Rational Consumers and Do They Suffer from a Borrowing Constraint? The Dutch Case," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24854, European Association of Agricultural Economists.
    6. Jason Henderson & Nathan Kauffman, 2013. "Farm investment and leverage cycles: will this time be different?," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 89-114.
    7. Sena Durguner, 2018. "Variations in farm consumption and their relationship to income: an empirical investigation of Illinois farm households," Applied Economics, Taylor & Francis Journals, vol. 50(9), pages 990-1005, February.
    8. Sand, Roald, 2002. "The Propensity to Consume Income from Different Sources and Implications for Saving: An Application to Norwegian Farm Households," Workshop on the Farm Household-Firm Unit: Its Importance in Agriculture and Implications for Statistics, April 12-13,2002, Wye Campus, Imperial College 15716, International Agricultural Policy Reform and Adjustment Project (IAPRAP).
    9. Artz, Georgeanne M. & Orazem, Peter F. & Otto, Daniel M., 2005. "Measuring the Impact of Meat Packing and Processing Facilities in the Nonmetropolitan Midwest: A Difference-in-Differences Approach," Working Papers 18219, Iowa State University, Department of Economics.
    10. Kevin Z. Chen & Karl D. Meilke & Calum Turvey, 1999. "Income risk and farm consumption behavior," Agricultural Economics, International Association of Agricultural Economists, vol. 20(2), pages 173-183, March.
    11. Gardebroek, Cornelis & Oude Lansink, Alfons G.J.M., 2008. "Dynamic Microeconometric Approaches To Analysing Agricultural Policy," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6592, European Association of Agricultural Economists.
    12. Zhao, Chunkai & Wu, Yaqian & Guo, Jianhao, 2022. "Mobile payment and Chinese rural household consumption," China Economic Review, Elsevier, vol. 71(C).
    13. Monke, James D., 1997. "Tax-Deferred Risk Management Accounts For Farmers," 1997 Annual meeting, July 27-30, Toronto, Canada 21025, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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