Leveraging Wealth from Farmland Appreciation: Borrowing, Land Ownership, and Farm Expansion
Jeremy Weber () and
MPRA Paper from University Library of Munich, Germany
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 run-up in farmland prices. We find no effect of land wealth on production or acres harvested.
Keywords: real estate appreciation; borrowing, collateral, farm wealth (search for similar items in EconPapers)
JEL-codes: Q1 R1 (search for similar items in EconPapers)
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Journal Article: Leveraging Wealth from Farmland Appreciation: Borrowing, Land Ownership, and Farm Expansion (2015)
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:58899
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