Dynamic Relationships Between Farm Real Estate Values and Federal Farm Program Payments
By: Shaik, Saleem; Miljkovic, Dragan
Shaik, Saleem; Miljkovic, Dragan, Dynamic Relationships Between Farm Real Estate Values and Federal Farm Program Payments, Journal of Agricultural and Resource Economics, Volume 35, Issue 1, April 2010, Pages 153-165
This study examines the dynamic relationships among farm real estate values, farm returns, farm program payments, and real interest rates in an income capitalization model. Endogeneity is assumed among the variables in a dynamic framework because the direction of causality is unclear from a theoretical standpoint. The analysis encompasses the period beginning with the introduction of the first farm bill in 1933 and ending in 2006. Results indicate farm program payments have positive direct impacts in the short run and positive indirect impacts (via farm returns) in the long run on farm real estate values.