The State Civilian Granary System and Price Stability, 1741–1856

Over the past several decades governments across the world have begun targeting price stability in financial markets. This is a stark contrast to the laissez-faire approach of the twentieth century and has few precedents in Western financial history. In China, however, the notion that state intervention is necessary to stabilize market prices dates to the fifth century BC, and grain storage, as a tool of intervention, has remained an important political concern for over two millennia. During this Quantitative History Webinar, Andrew J. Sinclair of HKU Business School will explain how he studies the effect of the state civilian granary system on price stability between 1741 and 1856. During this period, granaries held a value of grain equal to nearly 40% of annual fiscal revenues and were required to turnover their entire stock every three years. While the literature has focused on the role of granaries in reducing famine, Andrew uses this unique historical setting to quantify the long-term behavior of market prices under the presence of an interventionist government.

Discussant: Ziang Liu (HKU)