Lukas Cechura, Ph.D., Department of Agricultural Economics, Czech Agricultural University, Kamycka 129, Prague, 16521, Czech Republic
The paper deals with the simulation of the impact of credit constraint on farmer’s economic equilibrium under the defined scenarios. The simulation is carried out based on the derived dynamic optimization model, which is the dynamic investment model with adjustment costs. The credit constraint is introduced by imposing an upper limit on the control variable, which is in this case represented by the investment spending. Then, the optimal control is used to solve the optimization problem in the situation of both with and without credit constraints. Finally, the scenarios without and with different kind of supports are simulated. The results show that the scenario represented by subsidised interest rate by SGAF is the most efficient support from both firm and public policy point of view.