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Inflationary Expectations and the Value of U.S. Farm Real Estate: Some Consistent Estimates

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  • W. J. Martin
  • Earl O. Heady

Abstract

In a number of recent papers, Martin Feldstein has hypothesized that expected inflation may increase the real value of assets such as farm real estate. In this paper, simple models of the value of U.S. farm real estate were developed to test this hypothesis. Both adaptive expectations and "rational" interest rate-based expectations of future inflation were considered. Adaptive expectations measures for expected inflation generally suggested a negative impact of inflation on real estate value. The interest rate-based expectation measures had a positive coefficient in all cases but only in one case out of six was this coefficient significant.

Suggested Citation

  • W. J. Martin & Earl O. Heady, 1982. "Inflationary Expectations and the Value of U.S. Farm Real Estate: Some Consistent Estimates," Center for Agricultural and Rural Development (CARD) Publications 82-wp1, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  • Handle: RePEc:ias:cpaper:82-wp1
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    Cited by:

    1. Flowers, Gwendolyn G., 1983. "An economic analysis of the relation of farm land values and returns," ISU General Staff Papers 198301010800009469, Iowa State University, Department of Economics.
    2. Moore, Kevin Clare, 1985. "Predictive econometric modeling of the United States farmland market: an empirical test of the rational expectations hypothesis," ISU General Staff Papers 198501010800008872, Iowa State University, Department of Economics.

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