Radka Nenova
INFLUENCE OF RENT ON THE PRICE OF AGRICULTURAL LAND IN BULGARIA
Summary:
In recent years in Bulgaria there has been a functioning market for agricultural land, which affects the variation of prices. The present study emphasizes the need to take into account the cross-sectional and time differences in the price of agricultural land which is the object of the study. With the development of land relations, the importance of the price for the use of agricultural land (rent) increases. For this reason, the subject is to reveal the impact of the amount of rent on the price of agricultural land. The goal is to measure and evaluate the strength of the relationship between them. The main research thesis of the author is that, other things being equal, the change in the amount of rent leads to the same change in the price of agricultural land, but at different rates, and existing cross-sectional and time effects of this relationship can be fixed and analyzed. NSI data on the price of agricultural land and rent in Bulgaria by districts and by years for the period 2010-2018 have been used.
In theoretical terms, the basis for the study is the capitalized rent approach proposing a specific adapted methodology. Four regression models were constructed: simple panel regression, panel regression with region fixed effect, panel regression with year fixed effect and panel regression with region and year fixed effect at the same time. All four models are adequate, there is no autocorrelation in the residues; well describe the change in the studied variables.
The main conclusion is that, other things being equal, the change in rent leads to a change in the price of agricultural land, which is different in space and time and in turn can generate an increase or decrease in investment intentions of investors to agricultural land in different regions in different periods of time. The inclusion of fixed effects in the models is substantiated and the results show that the model with region-year fixed effects is the best.
