EVALUATING FARMLAND INVESTMENTS CONSIDERING DYNAMIC STOCHASTIC RETURNS AND FARMLAND PRICES

This paper examines farmland investment decisions using a stochastic dynamic programming framework. Consideration is given to the dynamic, stochastic nature of farmland returns, linkages between farmland returns and farmland prices, and the effects of the above dynamic factors on a farm’s financial structure. Optimal decisions to purchase or sell farmland are found for a central Illinois farm with high quality farmland. Sizes and debt distributions are then determined, given that the optimal decision rule is followed. Decisions from the dynamic programming model also are compared to a capital budgeting model.


Issue Date:
1989-07
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/32457
Published in:
Western Journal of Agricultural Economics, Volume 14, Number 1
Page range:
143-156
Total Pages:
14




 Record created 2017-04-01, last modified 2017-08-22

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)