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How does local government’s information affect farmers’ agricultural investment: based on theoretical and empirical analysis

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Abstract

In order to promote China’s agriculture development, it is of great importance to understand how the local government’s investment information affects farmers’ agricultural investment. Using the empirical data of 31 provinces and cities in China, firstly, this paper analyzes the agricultural investment of farmers based on the Ramsey model and finds out that farmers’ enthusiasm for agricultural investment is affected by farmers’ rational expectation of rate of return and borrowing interest rates in agriculture. Secondly, this paper studies the relationship between local government and farmers about agricultural investment by conducting Iterated Elimination of Nash equilibrium game model. It is found that farmers tend to invest in agriculture according to the investment information made by the local government. The results of VAR and VEC model confirm that the local government’s investment in agriculture has a significant influence on farmers’ investment. In the long run, there is a stable co-integration relationship between them. As the agricultural investment of local government increases 1%, the farmers’ investment increases 0.386% accordingly. Therefore, through the education of agricultural skills and risk control, farmers can have a clearer understanding of the agricultural development. The local government needs to keep investing more in agriculture, which will effectively promote the agriculture investment of farmers and ultimately improve the quality of agriculture development.

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Authors and Affiliations

  1. College of Finance and Statistics, Hunan University, Changsha, People’s Republic of China

    Bao Zhu & Jing He

  2. Educational Science Research Institute, Hunan University, Changsha, People’s Republic of China

    Shiting Zhai

Authors
  1. Bao Zhu
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  2. Jing He
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  3. Shiting Zhai
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Correspondence to Jing He.

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Zhu, B., He, J. & Zhai, S. How does local government’s information affect farmers’ agricultural investment: based on theoretical and empirical analysis. Cluster Comput 22 (Suppl 6), 15091–15102 (2019). https://doi.org/10.1007/s10586-018-2500-9

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  • DOI: https://doi.org/10.1007/s10586-018-2500-9

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