Abstract
This study examines whether farm family consumption is liquidity-constrained. Results, using 1976 to 1990 data for groups of Illinois and Kansas farms, indicate that consumption behavior is not liquidity-constrained. Analysis of 207 Kansas farms in 1989 and 1990 provides similar results. These results are in contrast to findings for nonfarm families, and support the validity of using the life cycle-permanent income hypothesis for farm level modeling and analysis.
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