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| Roberts, Michael J.; Key, Nigel D.. |
| Farm-level Census data and county-level income shock data reveal that past unexpected income shocks affect the rate of change in average farm size. Average farm size increases more quickly in counties experiencing negative income shocks as compared to counties experiencing positive income shocks. This result cannot be explained by perfect-market models, which predict farm size should adjust according to changes in the relative prices of labor and capital. We posit a model wherein cash flows affect liquidity, which in turn affects farm borrowing and capital costs. In the model, farms that do not face liquidity constraints benefit from negative income shocks because they reduce land values, so these farms expand while liquidity-constrained farms contract.... |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Farm size; Farm structure; Income shocks; Liquidity constraint; Risk; Agricultural Finance; Industrial Organization. |
| Ano: 2002 |
URL: http://purl.umn.edu/19661 |
