A Recursive Programming Model of Farm Growth in Northern Germany
1966
Heidhues, Theodor
This article develops a recursive programming model of individual farm changes which includes explicitly savings, investments, and growth. Recursive programming as a sequential optimizing rule with a functional relationship between any given period and preceding periods permits the analysis of dynamic properties of adjustment processes. This model emphasizes the behavioral and objective structure of the money capital and investment constraints. The evaluation of growth possibilities is based on the ability of farms to accumulate investment capital relative to the investment needs projected by the model. The model was used to analyze the effects of four EEC policy alternatives on different types of farms in Northern Germany between 1964–65 and 1969–70. The assumed changes in prices and price ratios for agricultural products, in particular for grain, livestock, and milk, affect the projected annual farm income strongly; they lead to moderate shifts between various enterprises; yet the overall growth pattern as characterized by the introduction of new technology and capital‐labor substitution is remarkably similar under all alternatives.
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