EVALUATING FARMLAND INVESTMENTS CONSIDERING DYNAMIC STOCHASTIC RETURNS AND FARMLAND PRICES

Gary Schnitkey (), C. Robert Taylor and Peter J. Barry

Western Journal of Agricultural Economics, 1989, vol. 14, issue 01, 14

Abstract: This paper examines farmland investment decisions using a stochastic dynamic programming framework. Consideration is given to the dynamic, stochastic nature of farmland returns, linkages between farmland returns and farmland prices, and the effects of the above dynamic factors on a farm's financial structure. Optimal decisions to purchase or sell farmland are found for a central Illinois farm with high quality farmland. Sizes and debt distributions are then determined, given that the optimal decision rule is followed. Decisions from the dynamic programming model also are compared to a capital budgeting model.

Keywords: Land; Economics/Use (search for similar items in EconPapers)
Date: 1989
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:wjagec:32457

DOI: 10.22004/ag.econ.32457

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