Macroeconomic Policy and Agriculture Chapter 15 Introduction to Agricultural Economics, 4/e John B. Penson, Jr., Oral Capps, Jr., C. Parr Rosson III

Can macroeconomic policy affect agriculture? Sure! financial stress caused by double-digit interest rates… Can macroeconomic policy affect agriculture? Sure! financial stress caused by double-digit interest rates…

Note the high real interest rates, rising exchange rates and high real price of fuel in the mid-1980s. Note the high real interest rates, rising exchange rates and high real price of fuel in the mid-1980s.

Drop in real net farm income and higher real interest rates led to declines in farmland values. Drop in real net farm income and higher real interest rates led to declines in farmland values.

As real net farm incomes declined and real interest rates rose, investment expenditures fell sharply. Outlays for operating inputs also declined. As real net farm incomes declined and real interest rates rose, investment expenditures fell sharply. Outlays for operating inputs also declined.

This table summarizes the impacts that expansionary and contractionary monetary and fiscal policy have upon key variables that have a distinct effect on the financial health of farm operator families. This table summarizes the impacts that expansionary and contractionary monetary and fiscal policy have upon key variables that have a distinct effect on the financial health of farm operator families.

Page 427 This table summarizes the impacts that expansionary and contractionary monetary and fiscal policy ultimately have upon such farm sector variables as commodity prices, input costs, net farm income and farmland price. This table summarizes the impacts that expansionary and contractionary monetary and fiscal policy ultimately have upon such farm sector variables as commodity prices, input costs, net farm income and farmland price.