Farmers' Marginal Propensity to Consume: An Application to Illinois Grain Farms

Michael Langemeier and George F. Patrick

American Journal of Agricultural Economics, 1990, vol. 72, issue 2, 309-316

Abstract: The marginal propensity to consume (MPC) for a sample of eighteen Illinois farms over the 1979–86 period is determined. Four consumption models were estimated using disposable household income plus depreciation as the measure of income. Estimated short-run MPCs ranged from 0.007 to 0.020, while long-run MPCs varied between 0.143 to 0.381. These results indicate farm family consumption responded little to changes in income and that the life cycle hypothesis model explains consumption significantly better than the other models. Robustness of the results is demonstrated using a larger sample of farms for 1986&87.

Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:72:y:1990:i:2:p:309-316.

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