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The Effect Of Farm Policies On The Riskiness Of Farming Accounting For The Induced Leverage Effect

Author

Listed:
  • Featherstone, Allen M.
  • Moss, Charles B.
  • Baker, Timothy G.

Abstract

The effects of risk reducing and income augmenting farm policies are examined using a theoretical framework which incorporates optimal leverage. Results indicate that the use of risk reducing and income augmenting farm policies increase the expected utility of farmers, hOwever, the policies make farmers more susceptible to equity losses.

Suggested Citation

  • Featherstone, Allen M. & Moss, Charles B. & Baker, Timothy G., 1986. "The Effect Of Farm Policies On The Riskiness Of Farming Accounting For The Induced Leverage Effect," 1986 Annual Meeting, July 27-30, Reno, Nevada 278070, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea86:278070
    DOI: 10.22004/ag.econ.278070
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    References listed on IDEAS

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    1. Anderson, Jock R. & Dillon, John L. & Hardaker, Brian, 1977. "Agricultural Decision Analysis," Monographs: Applied Economics, AgEcon Search, number 288652, November.
    2. Kroll, Yoram & Levy, Haim & Markowitz, Harry M, 1984. "Mean-Variance versus Direct Utility Maximization," Journal of Finance, American Finance Association, vol. 39(1), pages 47-61, March.
    3. Robert A. Collins, 1985. "Expected Utility, Debt-Equity Structure, and Risk Balancing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(3), pages 627-629.
    4. Stephen C. Gabriel & C. B. Baker, 1980. "Concepts of Business and Financial Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 560-564.
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