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Is Michał Kalecki's theory of investment applicable today? The case study of agricultural holdings in the EU countries

The purpose of the article is to recognise whether Michał Kalecki‘s investment theory works in the functioning of farms in the EU countries. We use the data of farms of the EU FADN (Farm Accountancy Data Network) system. The dynamic panel (the 1st difference generalised method of moments – GMM) estimator model was employed for analysis. The assessments were related to the economic size of farms. The results have allowed the partial confirmation of the validity of Kalecki's model to explain agricultural holdings adjustment mechanisms in the investment sphere. It is about medium-large (ES4) and large farms (ES5). In smaller farms (ES1–3) this mechanism was not recorded, and also in the largest agricultural holdings (ES6) where the development mechanism is more complex. Thus the size of farms determines different changes in investments activity in analysed groups of farms. Results suggest that a demand effect of investment expenditures, in the case of the examined group of farms, predominates to supply effect. It can be attributed to the fact that agriculture through the institutional system (the CAP – Common Agricultural Policy) and the peculiarities of this sector have weakened internal competition. We should be aware that the developmental mechanisms of agricultural holdings in the investment sphere are complex, and Kalecki’s theory may somewhat better understand these mechanisms.