Excess Capital in Agricultural Production

Subal Kumbhakar, Zhengfei Guan and Alfons Oude Lansink ()

No 9813, 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: In this article we propose a theoretical model for analyzing capital requirement in agricultural production and define excess capital thereupon. We develop a two-step method that allows endogenous regressors in the maximum likelihood estimation. The two-step procedure is also capably of recovering the parameters of time invariant variables in fixed effect models. The model and method are applied to a capital requirement study using data from cash crop farms in the Netherlands. Empirical results show that excess capital widely exists on the farm. The implications of excess capital are further demonstrated with a production frontier analysis.

Keywords: Production; Economics (search for similar items in EconPapers)
Pages: 32
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea07:9813

DOI: 10.22004/ag.econ.9813

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