Abstract

We study how increases in wealth from rapid appreciation of farmland influenced farmer decisions to borrow, buy land, and expand. Exploiting periods of high and low appreciation and a panel data model that allows for correlation between prior growth trends and the share of land owned, we find that a dollar increase in paper wealth led younger farmers to increase real-estate-secured borrowing by 48 cents. Land purchases accompanied the increase in borrowing, supporting the view that collateral-based lending may be contributing to the recent runup in farmland prices. We find no effect of land wealth on production or acres harvested.

pdf

Additional Information

ISSN
1543-8325
Print ISSN
0023-7639
Pages
pp. 344-361
Launched on MUSE
2015-04-13
Open Access
No
Back To Top

This website uses cookies to ensure you get the best experience on our website. Without cookies your experience may not be seamless.