Abstract
Regression methods previously employed to study stock price movements are used to test how well the present value model under rational expectations explains farmland price movements. Based on data on farmland prices and rents (returns to landownership) covering the period 1921‐89 from three agricultural regions in the United States, the empirical results reject the present value model under rational expectations. These results suggest that farmers may be well‐characterised as displaying satisficing rather than profit‐maximising behaviour.
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