Market Timing, Farmer Expectations, and Liquidity Constraints

51 Pages Posted: 14 Jul 2021

See all articles by Rui A. Albuquerque

Rui A. Albuquerque

Boston College, Carroll School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Luis Brandao-Marques

International Monetary Fund - Monetary and Capital Markets Department

Bruno Araujo

Eduardo Modelane University

Pippy Vletter

Cooperative League of the United States of America

Gerivásia Mosse

The International Center for Water Economics and Governance in Africa (IWEGA)

Helder Zavale

Eduardo Mondlane University (UEM)

Multiple version iconThere are 2 versions of this paper

Date Written: June 1, 2021

Abstract

This paper uses data on farmers' price expectations from a randomized survey of smallholder farmers in Mozambique. Survey data show that across all crops most interviewed farmers expect prices to be higher in the lean season. Yet, farmers report selling most of their output shortly after harvest when prices are lower. We find that higher expected prices and lower current sale prices are associated with increased storage for liquidity constrained farmers versus unconstrained farmers. We develop an intertemporal model of market timing in the presence of liquidity constraints that is consistent with these findings and discuss other model predictions.

JEL Classification: D14, D15, G51, O13, O16, Q11, Q12, Q14

Suggested Citation

Albuquerque, Rui A. and Brandao-Marques, Luis and Araujo, Bruno and Vletter, Pippy and Mosse, Gerivásia and Zavale, Helder, Market Timing, Farmer Expectations, and Liquidity Constraints (June 1, 2021). CEPR Discussion Paper No. DP16220, Available at SSRN: https://ssrn.com/abstract=3886662

Rui A. Albuquerque (Contact Author)

Boston College, Carroll School of Management ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States

HOME PAGE: http://sites.google.com/view/ruialbuquerque/home

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Luis Brandao-Marques

International Monetary Fund - Monetary and Capital Markets Department ( email )

700 19th Street, N.W.
Washington, DC 20431
United States
2026238308 (Phone)
2025898308 (Fax)

Bruno Araujo

Eduardo Modelane University ( email )

Pippy Vletter

Cooperative League of the United States of America ( email )

United States

Gerivásia Mosse

The International Center for Water Economics and Governance in Africa (IWEGA)

University of Eduardo Mondlane
Maputo
Mozambique

Helder Zavale

Eduardo Mondlane University (UEM) ( email )

Maputo
Mozambique

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