Off-Farm Income and Risk Reduction in Agriculture: When Does It Matter?
Hans Andersson, B. Sailesh Ramamurtie, and Bharat Ramaswami
Federal Reserve Bank of Atlanta
Working Paper 95-14
Investment behavior is analyzed using a dynamic portfolio model including off-farm income. The correlation structure of off-farm income and asset returns and the ratio of off-farm income to wealth is shown to affect portfolio choice. Empirical analysis indicates that off-farm income tends to increase farm assets.
JEL classification: D51, D52, G12, J30