TY - JOUR
T1 - FARM HOUSEHOLD PRODUCTION IN THE PRESENCE OF RESTRICTIONS ON DEBT
T2 - THEORY AND POLICY IMPLICATIONS
AU - Phimister, E.
PY - 1995
Y1 - 1995
N2 - In this paper a two period life cycle model of the farm household is constructed allowing for production and restrictions on debt in which the consumption and production decisions of the farm household are simultaneous. It is shown that the farm household's production responses to exogenous changes may be qualitatively different to that predicted by the profit‐maximising model when all markets are perfect. In particular, when the household is debt constrained, ‘perverse’ output effects are possible with output increasing in response to output price decreases. Further, for such households, compensation payments will have production effects. Finally, the financial situation of the farm has an impact on production for debt constrained farms.
AB - In this paper a two period life cycle model of the farm household is constructed allowing for production and restrictions on debt in which the consumption and production decisions of the farm household are simultaneous. It is shown that the farm household's production responses to exogenous changes may be qualitatively different to that predicted by the profit‐maximising model when all markets are perfect. In particular, when the household is debt constrained, ‘perverse’ output effects are possible with output increasing in response to output price decreases. Further, for such households, compensation payments will have production effects. Finally, the financial situation of the farm has an impact on production for debt constrained farms.
UR - http://www.scopus.com/inward/record.url?eid=2-s2.0-0029485748&partnerID=MN8TOARS
U2 - 10.1111/j.1477-9552.1995.tb00783.x
DO - 10.1111/j.1477-9552.1995.tb00783.x
M3 - Article
SN - 0021-857X
SP - 371
EP - 380
JO - Journal of Agricultural Economics
JF - Journal of Agricultural Economics
ER -