Testing for speculation in agricultural land in Ireland

Agricultural land prices in many developed countries rose and then fell dra matically over a relatively short period in the late 1970s and early 1980s. Most of the models in the literature that describe the dynamic behaviour o f agricultural land prices suggest that these sharp price movements were no t completely due to market fundamentals. Many attribute part of this price volatility to speculation. This phenomenon is investigated by estimating a general regime-switching model that nests many types of speculative behavio ur as special cases. We find strong evidence to support a partially collaps ing bubbles model for Irish agricultural land prices.