Present-value models of land prices in England and Wales
- 1 June 1991
- journal article
- research article
- Published by Oxford University Press (OUP) in European Review of Agricultural Economics
- Vol. 18 (2) , 141-166
- https://doi.org/10.1093/erae/18.2.141
Abstract
This paper presents some parsimonious econometric models of the relationship between land prices and cash rents derived from an encompassing present-value framework. Alternatives based on adaptive, naive and rational (or perfect foresight) expectations are applied to three separate data sets on annual land prices in England and Wales. The empirical results support the adaptive expectations versions and imply that a real rate of discount of 2–3% per year is used in the land market. The notion of disequilibrium pricing is examined but is not supported in the sample period.Keywords
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