Evidence on the existence of speculative bubbles in farmland prices

We conduct tests for the contribution of speculative bubbles to farmland prices. These tests are carried out under the hypothesis that farmland investors rationally form expectations. The outcome of tests reported here allows us to infer whether farmland prices are determined by market fundamentals-discounted returns from the highest economic land use-or whether rumors about farmland price movements are self-fulfilling. The tests are stationarity and cointegration tests relating farmland prices to rents. The tests are carried out using data from three farm production regions-the Corn Belt, the Northern Plains, and the Lake States. In each region, we find little evidence to reject the hypothesis that market fundamentals determine farmland prices.     

Land Tenure and the Adoption of Conservation Practices

We use a logit adoption model with data on 941 U.S. corn producers from the 1996 Agricultural Resource Management Study to analyze the influence of land tenure on the adoption of conservation practices. We extend previous analyses by distinguishing renters according to lease type and by distinguishing practices according to the timing of costs and returns. We find that cash-renters are less likely than owner-operators to use conservation tillage, but share-renters are not. Both cash-renters and share-renters are less likely than owner-operators to adopt practices that provide benefits only over the longer term (grassed waterways, stripcropping, and contour farming).     

A description of farmland investor expectations

We consider how best to characterize agricultural real estate market participants' expectation formation mechanism. The expectation formation mechanism links current agricultural policies to asset prices and tells us how current policies change expectations for future transfers. We examine behavior of real estate prices and returns using the present value model. We derive estimable equations incorporating two rival expectation formation mechanisms: rational and adaptive expectations. Assuming rational expectations, the present value model yields parameter estimates that imply the model should be rejected. Instead of rejecting the present value model while maintaining the rational expectations hypothesis, we let the data reveal which expectations hypothesis best fits the data. When we assume the rival hypothesis, the model yields parameter estimates that conform to adaptive expectations.     

Kalman filter and the demand for cigarettes

kalman filter estimates of price, income and advertising elasticities are presented. An analysis of structural change in the demand for cigarettes in the US for the period 1929–86 is made. Estimated price and income elasticities are generally smaller, and the advertising elasticity larger, than estimates previously found. Cigarette demand is inelastic with respect to price and income, and advertising elasticity is statistically insignificant for the most part. Furthermore, both income and price elasticities decline over time while advertising elasticity tends to rise. Four time periods where structural change has occurred are identified. The health scare reports and the Fairness Doctrine Act have a significant impact on per capita cigarette consumption.     

Does Extension Work? Impacts of a Program to Assist Limited-Resource Farmers in Virginia

In this article the economic impacts of Virginia State University's Small Farm Outreach, Training, and Technical Assistance Program are assessed. Impacts are measured in terms of program effect on incomes of limited-resource participant farmers compared with their net farm incomes had they not participated. The program appears to significantly increase net farm income, provided there is sufficient intensity of participation. A single visit by an agent had no significant effect on income, suggesting a rationale for deepening participation intensity before broadening it. Aggregate program benefits may approach $5 million per year (for a cost of a few hundred thousand dollars).     

Irreversible Investment Under Uncertainty: Conservation Easements and the Option to Develop Agricultural Land

A landowner's decision to convert farmland to urban use is presented as an irreversible investment under uncertainty. This approach improves on conventional approaches to the valuation of conservation easements by incorporating option values. This approach also refines the calculation of compensation potentially due to landowners when use of their land is restricted by government policies to protect the environment.     

Trade flows,relative prices,and effective exchange rates: a VAR on Ethiopian data

The dynamic response of trade flows to price and effective exchange rate changes is examined via VAR using quarerly data from Ethiopia for the period 1973(i)–1985(iv). The results show one-way Granger-causality running from prices and exchange rates to imports and exports without significant feedback. Imports and exports exhibit similar response patterns to unexpected changes in relative prices and exchange rates. The responses of imports and exports are larger and the adjustment takes longer when relative prices rather than exchange rates caused a change in international prices. In the long-run, changes in prices account for a larger percentage of the forecast error variances in imports and exports than exchange rate changes. It is shown that devaluation may have an initial adverse effect on the trade balance.     

Taxing Snack Foods: Manipulating Diet Quality or Financing Information Programs?

This paper investigates consumers' likely response to a proposed tax on snack foods that addresses public health issues generated by rising U.S. obesity rates. We estimate demands for particular snack foods and show they are price inelastic after accounting for quality variation. We calculate impacts of a range of ad valorem taxes on the demand for salty snack food. The impacts on dietary quality are small, and negligible at the lower tax rates. If taxes were earmarked for funding information programs, as several proponents suggest, taxes would generate a revenue stream the public health community could use for nutrition education.