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AN ECONOMIC ALTERNATIVE TO CONCESSIONAL FARM INTEREST RATES: REPLY

AN ECONOMIC ALTERNATIVE TO CONCESSIONAL FARM INTEREST RATES: REPLY Australian Journal of Agricultural Economics, Vol. 20, No. 2 (August 1976), pp. 123-124. AN ECONOMIC ALTERNATIVE TO CONCESSIONAL FARM INTEREST RATES: REPLY C. B. BAKER University of Illinois I am grateful for the opportunity to clarify the content on page 182 of my article [I]. It may have failed to communic'ate with others as it appejars to have with Groves and Turnbull [2]. The debt reserve plan is intended to induce more long-term lending whilst reducing relianoe on concessions in farm mortgage interest rates. The arithmetic in the article is designed to indicate that this can be accomplished with little damage to the borrower in term5 of direct effects. The statistical results in Table 8 [l] show that in 6 of the 15 years simulated, the net cash flow (NCF) under the debt reserve plian (DRP) failed to reach the budgeted requirements, as opposed to 9 years under the conventional plan (CP). Moreover failures would repeat in suc- ceeding periods, under ithe CP. Under the DRP, no failures would occur, given the data uf the example. In the 15 yems reported the variance of NCF under the DRP was reduced to 90 per cent of the variance of NCF http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Australian Journal of Agricultural Resource Economics Wiley

AN ECONOMIC ALTERNATIVE TO CONCESSIONAL FARM INTEREST RATES: REPLY

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Publisher
Wiley
Copyright
Copyright © 1976 Wiley Subscription Services, Inc., A Wiley Company
ISSN
1364-985X
eISSN
1467-8489
DOI
10.1111/j.1467-8489.1976.tb00182.x
Publisher site
See Article on Publisher Site

Abstract

Australian Journal of Agricultural Economics, Vol. 20, No. 2 (August 1976), pp. 123-124. AN ECONOMIC ALTERNATIVE TO CONCESSIONAL FARM INTEREST RATES: REPLY C. B. BAKER University of Illinois I am grateful for the opportunity to clarify the content on page 182 of my article [I]. It may have failed to communic'ate with others as it appejars to have with Groves and Turnbull [2]. The debt reserve plan is intended to induce more long-term lending whilst reducing relianoe on concessions in farm mortgage interest rates. The arithmetic in the article is designed to indicate that this can be accomplished with little damage to the borrower in term5 of direct effects. The statistical results in Table 8 [l] show that in 6 of the 15 years simulated, the net cash flow (NCF) under the debt reserve plian (DRP) failed to reach the budgeted requirements, as opposed to 9 years under the conventional plan (CP). Moreover failures would repeat in suc- ceeding periods, under ithe CP. Under the DRP, no failures would occur, given the data uf the example. In the 15 yems reported the variance of NCF under the DRP was reduced to 90 per cent of the variance of NCF

Journal

The Australian Journal of Agricultural Resource Economics – Wiley

Published: Aug 1, 1976

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