Rents, interest rates and real agricultural land prices: An application to a Greek province

Summary The objective of this paper is to identify and investigate empirically the major factors that affected real farmland prices in Greece for the period 1967 to 1988. The paper treats farmland not only as a factor of production but also as a vehicle for storing and preserving wealth. In this respect, an investigation of the behaviour of the real interest rate is undertaken and its impact on farmland prices is examined through a dynamic econometric model. The empirical work investigates agricultural land prices in the Etoloacarnania prefecture where one of the major plains of Greece is situated. The results of the statistical estimation suggest that both rental income and real interest rates have a significant effect on farmland prices.