Machinery Investment Decisions: A Simulated Analysis for Cash Grain Forms

A combination of experimental and simulation procedures identify important factors in an Illinois cash grain farmer's machinery investment decisions. In an experiment setting, a panel of farmers based investment decisions on their own expectations, farm situations, and varying policy scenarios. In general, the results show investment levels statistically related to the tenure and leverage of operators, the economic conditions they faced, and the age of existing machinery. Alternative public policies of lower commodity price supports, tax reform, and interest rate subsidies influenced the timing of purchases but did not alter total investment amounts. Key words: expectations, experiment, farm policy, interest rates, investment, machinery, simulation. Most studies of machinery investment behav-ior have utilized aggregate time-series data to evaluate investment responses to machine costs, commodity prices, capacity deprecia-tion, tax obligations, interest rates, and othe