Capital adjustment patterns on Dutch pig farms

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Abstract

This paper develops a generalised adjustment cost framework that explicitly accounts for zero investments on Dutch pig farms. A farm-specific flexible adjustment cost function is used to account for differences in adjustment costs between farms. Using the Generalised Method of Moments the Euler equations for investment in buildings and machinery are estimated on a panel of specialised Dutch pig farms. It is found that adjustment costs are an important determinant in investment for buildings but not for machinery.
Original languageEnglish
Pages (from-to)39-59
Number of pages20
JournalEuropean Review of Agricultural Economics
Volume31
Issue number1
DOIs
Publication statusPublished - 2004

Keywords

  • asymmetric adjustment
  • dynamic adjustment
  • investment
  • uncertainty
  • cost
  • specification
  • expectations
  • equations
  • industry
  • models

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