The User Cost of Capital in Danish and Swedish Agriculture

Carl-Johan Lagerkvist

European Review of Agricultural Economics, 1999, vol. 26, issue 1, 79-100

Abstract: This paper derives a generalised dynamic arbitrage model for the aggregated real user cost of capital attributable to the agricultural firm. The applicability of the model is demonstrated by analysing structural differences in investment incentives between the crop, dairy and hog industries for different farm sizes in Denmark and Sweden during the period between 1984 and 1995. The results indicate notable differences in user costs between countries, farm sizes and farming systems. Although larger farms are found to be characterised by a lower user cost, this result is mitigated by the structure of asset composition. Copyright 1999 by Oxford University Press.

Date: 1999
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European Review of Agricultural Economics is currently edited by Timothy Richards, Salvatore Di Falco, Céline Nauges and Vincenzina Caputo

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