Hostname: page-component-586b7cd67f-rcrh6 Total loading time: 0 Render date: 2024-11-22T10:28:10.626Z Has data issue: false hasContentIssue false
  • English
  • Français

A Structural Approach to Estimating Rate of Return Expectations of Farmers

Published online by Cambridge University Press:  28 April 2015

Bruce L. Ahrendsen
Bruce L. Ahrendsen*
Affiliation:
University of Arkansas, and a principal of the Center for Farm and Rural Business Finance
Get access Rights & Permissions [Opens in a new window]

Abstract

A dual cost function approach is developed as an alternative to time series and simplistic approaches for estimating farmers' expected operating rates of return on assets. A translog restricted cost function is estimated using data provided by 152 North Carolina dairy farmers over the period 1976 through 1986. The predicted costs from the fitted restricted cost function are used to construct estimates of farmers' expected operating rates of return on assets. The estimates from this structural approach explain more of the variation in observed rates than do time series estimates or sample mean observed rates.

Keywords

estimating expectationsrate of returntranslog cost function
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 25 , Issue 2 , December 1993 , pp. 56 - 68
Copyright
Copyright © Southern Agricultural Economics Association 1993

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Ahrendsen, B.L. “Optimal Capital Structure for the Proprietary Firm: An Empirical Analysis of North Carolina Dairy Farms.” Unpublished Ph.D. Dissertation, North Carolina State University, Raleigh, 1990.Google Scholar
Alston, J.M. “An Analysis of Growth of U.S. Farmland Prices, 1963-82.” Amer. J. Agr. Econ. 68(1986): 1–9.CrossRefGoogle Scholar
Barry, P.J., Baker, C.B., and Sanint, L.R.. “Farmers' Credit Risks and Liquidity Management.” Amer. J. Agr. Econ. 63(1981):216-27.CrossRefGoogle Scholar
Benson, G.A., Sutter, S.R., Wells, R.C., Pardue, D.C., and Harwood, D.G. Jr. “Dairy Farm Business Summary and Business Evaluation Workbook.” Raleigh. The North Carolina Agricultural Extension Service. Issues 1964–1986.Google Scholar
Box, G.E.P. and Jenkins, G.M.. Time Series Analysis: Forecasting and Control. Revised Edition, San Francisco, CA: Holden-Day, 1976.Google Scholar
Brocklebank, J.C. and Dickey, D.A.. SAS System for Forecasting Time Series, 1986 Edition. Cary, NC: SAS Institute Inc., 1986.Google Scholar
Brown, K.C. and Brown, D.J.. “Heterogenous Expectations and Farmland Prices.” Amer. J. Agr. Econ. 66(1984): 164-69.CrossRefGoogle Scholar
Brown, R.S. and Christensen, L.R.. “Estimating Elasticities of Substitution in a Model of Partial Static Equilibrium: An Application to U.S. Agriculture, 1947-74,” in Berndt, E.R. and Field, B.C., eds., Modeling and Measuring Natural Resource Substitution, Cambridge, MA: MIT Press, 1981.Google Scholar
Burt, O.R. “Econometric Modeling of the Capitalization Formula for Farmland Prices.” Amer. J. Agr. Econ. 68(1986): 10–26.CrossRefGoogle Scholar
Capalbo, S.M. and Antle, J.M.. Agricultural Productivity: Measurement and Explanation. Washington, DC: Resources for the Future, Inc., 1988.Google Scholar
Collins, R.A. “Expected Utility, Debt-Equity Structure, and Risk Balancing.” Amer. J. Agr. Econ. 67(1985):627-29.CrossRefGoogle Scholar
Falk, B. “Formally Testing the Present Value Model of Farmland Prices”. Amer. J. Agr. Econ. 73(1991):1–10.CrossRefGoogle Scholar
Featherstone, A.M. and Baker, T.G.. “An Examination of Farm Sector Real Asset Dynamics: 1910-85.” Amer. J. Agr. Econ. 69(1987):532-6.CrossRefGoogle Scholar
Fried, Joel. “Forecasting and Probability Distributions for Models of Portfolio Selection.” J. Finan. 25(1970):539-54.CrossRefGoogle Scholar
Goldberger, A.S. “The Interpretation and Estimation of Cobb-Douglas Functions.” Econometrica 35(1968):464-72.CrossRefGoogle Scholar
Judge, G.G., Griffiths, W.E., Hill, R.C., Lutkepohl, H., and Lee, T.C.. The Theory and Practice of Econometrics. New York: John Wiley & Sons, 1985.Google Scholar
Kennedy, Peter. A Guide to Econometrics. Cambridge, MA: MIT Press, 1985.Google Scholar
Ljung, G.M. and Box, G.E.P.. “On a Measure of Lack of Fit in Time Series Models.” Biometrika. 65(1978):297–303.CrossRefGoogle Scholar
Melichar, Emanuel. “Capital Gains versus Current Income in the Farming Sector.” Amer. J. Agr. Econ. 61(1979): 1085-92.CrossRefGoogle Scholar
Moss, C.B., Shonkwiler, J.S. and Ford, S.A.. “A Risk Endogenous Model of Aggregate Agricultural Debt.” Agr. Finan. Rev. 50(1990):73–79.Google Scholar
Murray, W.G., Harris, D.G., Miller, G.A. and Thompson, N.S.. Farm Appraisal and Valuation. Ames, Iowa: The Iowa State University Press, 1983.Google Scholar
Scott, J.T. and Baker, C.B.. “A Practical Way to Select an Optimum Farm Plan under Risk.” Amer. J. Agr. Econ. 54(1972):657-60.CrossRefGoogle Scholar
Tegene, Abebayehu and Kuchler, Fred. “An Error Correcting Model of Farmland Prices.” Applied Econ. 23(1991):1741-47.CrossRefGoogle Scholar
U. S. Department of Agriculture. Agricultural Prices, Annual Summary. Washington, DC, various issues.Google Scholar
U. S. Department of Agriculture. Agricultural Statistics. Washington, DC: U. S. Government Printing Office, various issues.Google Scholar
Zellner, A. 1962. “An Efficient Method of Estimating Seemingly Unrelated Regressions and Tests of Aggregation Bias.” J. Amer. Statistical Association. 57(1962):348-68.CrossRefGoogle Scholar