Land prices, rents and inflation: A cointegration analysis

Abstract
This paper examines the relationship between real agricultural land prices and real rents for farmland using annual data. Taking account of inflation as a third variable there is evidence to suggest that rents and land prices are cointegrated; that is, changes in rents are mirrored in the long run by changes in land prices. It is also found that the implied real rate of return in the land market is around 3%.