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The Consumption Behaviour of Farmers: a review of the evidence

Author

Listed:
  • O'Mara, L. Paul
  • Mullen, John D.
  • Powell, Roy A.
  • Reece, B.F.

Abstract

Over recent years there has been marked instability in incomes earned from farming. The instability, which affects the economy generally, is transmitted partly through the consumption spending of farmers. A conventional view of the short-run marginal propensity to consume of farmers, supported by some analyses of aggregate data, is that it is zero. It is argued that this view is implausible on theoretical grounds, that the analysis giving rise to this view used aggregate data which contained serious flaws, and that evidence from micro-studies and other macro level analyses present a more realistic assessment that the short-run mpc of farmers is not zero but likely to be lower than that of non-farmers. A non-zero mpc has implications for how the farm sector interacts with the rest of the economy and is incorporated in models of the economy.

Suggested Citation

  • O'Mara, L. Paul & Mullen, John D. & Powell, Roy A. & Reece, B.F., 1988. "The Consumption Behaviour of Farmers: a review of the evidence," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 56(02), pages 1-15, August.
    • Handle: RePEc:ags:remaae:12552
    DOI: 10.22004/ag.econ.12552
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    References listed on IDEAS

    as
    1. H. W. Arndt & Burgess Cameron, 1957. "An Australian Consumption Function," The Economic Record, The Economic Society of Australia, vol. 33(64), pages 108-115, April.
    2. John D. Mullen & Roy A. Powell & B.F. Reece, 1980. "The Income And Consumption Experiences Of A Sample Of Farm Families," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 24(3), pages 268-282, December.
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    4. GirAo, J A & Tomek, W G & Mount, T D, 1974. "The Effect of Income Instability on Farmers' Consumption and Investment," The Review of Economics and Statistics, MIT Press, vol. 56(2), pages 141-149, May.
    5. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
    6. Keith O. Campbell, 1958. "Some Reflections On Agricultural Investment," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 2(2), pages 93-103, December.
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    9. Campbell, Keith O., 1958. "Some Reflections On Agricultural Investment," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 2(2), pages 1-11, December.
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    12. Mullen, John D. & Powell, Roy A. & Reece, B.F., 1980. "The Income And Consumption Experiences Of A Sample Of Farm Families," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 24(3), pages 1-15, December.
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    Cited by:

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