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Borrowing constraints and the agricultural investment decision process
Author(s) -
Gutierrez Luciano
Publication year - 2002
Publication title -
agribusiness
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.57
H-Index - 43
eISSN - 1520-6297
pISSN - 0742-4477
DOI - 10.1002/agr.10008
Subject(s) - economics , investment (military) , agriculture , econometrics , investment decisions , microeconomics , production (economics) , ecology , politics , political science , law , biology
This paper develops a dynamic intertemporal model under the hypothesis of asymmetric information for the analysis of the rate of investment in the agricultural sector. The model stresses the importance of borrowing constraints for the investment decision of firms. Using the model we derive, following Abel and Blanchard's (1986) approach, an estimate for marginal Tobin's Q. We find that this series is positively and strongly related to the agricultural rate of investment in Italy during the period of 1960–1996. [Econ‐Lit Citations: Q14, E62, E22] © 2002 Wiley Periodicals, Inc.