Determinants of Private Investment in Dutch Agriculture

W Erno Kuiper and Geert J Thijssen

European Review of Agricultural Economics, 1996, vol. 23, issue 4, 455-72

Abstract: This paper analyses the determinants of private investment in Dutch agriculture. In the literature on investment behaviour several determinants are proposed, but none of the theoretical models encompasses the other ones. Using cointegration analysis, many theoretical views can be embedded in one general model, the so-called vector error-correction model, which allows many hypotheses to be tested. For Dutch agriculture we reject the adjustment cost model of investment, because investment is found to depend on the ratio of equity to equity plus debt, which can be interpreted as a financial constraint not included in the adjustment cost model. Copyright 1996 by Oxford University Press.

Date: 1996
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