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Short- and Long-Run Credit Constraints in French Agriculture: A Directional Distance Function Framework Using Expenditure-Constrained Profit Functions

Listed author(s):
  • S. Blancard
  • J.Ph. Boussemart

    (LEM - Lille - Economie et Management - Université de Lille, Sciences et Technologies - Fédération Universitaire et Polytechnique de Lille - Université de Lille, Sciences Humaines et Sociales - CNRS - Centre National de la Recherche Scientifique)

  • W. Briec
  • K. Kerstens

    (LEM - Lille - Economie et Management - Université de Lille, Sciences et Technologies - Fédération Universitaire et Polytechnique de Lille - Université de Lille, Sciences Humaines et Sociales - CNRS - Centre National de la Recherche Scientifique)

This empirical application investigates the eventual presence of credit constraints using a panel of French farmers. The credit-constrained profit maximization model proposed by Färe, Grosskopf, and Lee is extended in three ways. First, we rephrase the model in terms of directional distance functions to allow duality with the profit function. Second, we model credit constraints in the short-run and investment constraints in the long-run using short- and long-run profit functions. Third, we lag the expenditure constraint one year to account for the separation between planning and production. We find empirical evidence of credit and investment constraints. Financially unconstrained farmers are larger, perform better, and seem to benefit from a virtuous circle where access to financial markets allows better productive choices. Copyright 2006, Oxford University Press.

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Paper provided by HAL in its series Post-Print with number hal-00211159.

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Date of creation: 2006
Publication status: Published in American Journal of Agricultural Economics, Oxford University Press (OUP), 2006, 88 ((2)), pp.351-364
Handle: RePEc:hal:journl:hal-00211159
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00211159
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