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Optimal Capital Structure And Income Support Reform Uncertainty

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  • Lagerkvist, Carl Johan
  • Olson, Kent D.

Abstract

This paper investigates the extent to which an active agricultural policy directed to the return and/or the variability of return in farming that is understood and anticipated, where the political process creates parameter uncertainty and noise about the precise timing of reform, influences the capital structure at the farm level. Closed for solutions for the implied restructuring prior to the reform is derived. The empirical analyses the policy induced incentives for debt levels adjustment that may have prevailed prior to and after the 1996 Farm Bill. The empirical analysis strongly supports the theoretical analysis.

Suggested Citation

  • Lagerkvist, Carl Johan & Olson, Kent D., 2002. "Optimal Capital Structure And Income Support Reform Uncertainty," 2002 Annual meeting, July 28-31, Long Beach, CA 19694, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea02:19694
    DOI: 10.22004/ag.econ.19694
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    15. Lagerkvist, Carl Johan & Olson, Kent D., 2001. "Asymmetric Information, Capital Structure And Agricultural Investment," 2001 Annual meeting, August 5-8, Chicago, IL 20652, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    Cited by:

    1. Bhaskar, Arathi & Beghin, John C., 2009. "How Coupled Are Decoupled Farm Payments? A Review of the Evidence," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(1), pages 1-24, April.
    2. Voica, Daniel C., 2014. "Are Subsidies Decoupled from Production in the Presence of Incomplete Financial Markets?," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169788, Agricultural and Applied Economics Association.
    3. Devadoss, Stephen & Gibson, Mark J. & Luckstead, Jeff, 2016. "The Impact of Agricultural Subsidies on the Corn Market with Farm Heterogeneity and Endogenous Entry and Exit," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(3), pages 1-20, September.
    4. Bhaskar, Arathi & Beghin, John C., 2007. "How Coupled are Decoupled Farm Payments? A Review of Coupling Mechanisms and the Evidence," Working Papers 7347, Iowa State University, Department of Economics.

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