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Farmland cash rents and the dollar
Author(s) -
Nag Sharmistha,
Reimer Jeffrey J.
Publication year - 2011
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/j.1574-0862.2010.00527.x
Subject(s) - liberian dollar , economics , economic rent , cash , monetary economics , renting , value (mathematics) , payment , revenue , microeconomics , finance , machine learning , political science , computer science , law
We explore whether the U.S. exchange rate could have an influence on cash rental rates for farmland in five U.S. cornbelt states. We find that farmland cash rents have a fairly strong, positive correlation with the U.S. dollar, in terms of its real value relative to major agricultural trading partners. One explanation for the correlation is that a strong dollar lowers the price of key inputs and thus has purchasing power effects. A strong dollar may therefore be associated with higher net returns, and the payment of higher cash rents by farmers. We find support for this hypothesis through a series of econometric models.