The Investment behaviour of dairy farms in transition economies

Imre Fertő, Štefan Bojnec (), Jozsef Fogarasi () and Ants-Hannes Viira
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Štefan Bojnec: Faculty of Management, University of Primorska, Koper, Slovenia
Jozsef Fogarasi: Keleti Károly Faculty of Business and Management, Óbuda University, Budapest, Hungary

Baltic Journal of Economics, 2021, vol. 21, issue 1, 60-84

Abstract: This article investigates dairy farm investment behaviour and the presence of soft budget constraints in the dairy farms of Baltic and Central European transition countries – Estonia, Hungary and Slovenia – using individual dairy farm accountancy panel data for the years 2007–2015. The empirical results confirm that gross dairy farm investment is positively associated with gross dairy farm investment for the previous year for financially unconstrained dairy farms, and negatively for financially constrained dairy farms. It is also positively associated with public investment subsidies, and, except for Slovenia, with growth in real sales for financially unconstrained dairy farms. Mixed results are found for gross dairy farm investment squared and cash flow variables. A particularly significant negative cash flow regression coefficient implies significant soft budget constraints for financially unconstrained Estonian and Slovenian dairy farms, while insignificant cash flow regression coefficients imply weak soft budget constraints for financially unconstrained Hungarian dairy farms.

Keywords: Dairy farm investment behaviour; soft budget constraint; investment subsidy; Euler equation; Baltic and Central Europe (search for similar items in EconPapers)
JEL-codes: D22 G31 H25 Q12 Q14 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:bic:journl:v:21:y:2021:i:1:p:60-84

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