Relationship between the land market, economic growth and land insecurity explained by an overlapping model

Claudio Araujo, Catherine Araujo Bonjean (), Jean-Louis Combes and Pascale Motel Combes ()

Brazilian Journal of Political Economy, 2006, vol. 26, issue 4, 575-595

Abstract: In this paper, we analyze the relationship between the land market failures and the economic growth in Brazil, starting from an overlapping model including two sectors: agricultural and industrial. The land is both a specific factor for agriculture and an asset that can be substituted to the capital used in industry. The trade-off between land and capital holding depends, among other factors, on the transaction costs on the land market. These costs result from land insecurity and generate a decrease in the land price that favors capital accumulation. Two assumptions follow from our model: one the one hand, land insecurity has a negative effect on the land price; one the other hand it has a positive effect on economic growth. These two hypotheses are tested on panel data for Brazilian Federation. The econometric results do not reject our hypothesis. JEL Classification: O41, Q15, O54.

Keywords: land price; trade off capital-land; overlapping model (search for similar items in EconPapers)
Date: 2006
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