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Price shocks in regional markets: Japan's great Kantō Earthquake of 1923

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  • Hunter, Janet
  • Ogasawara, Kota

Abstract

Japan’s Great Kantō Earthquake of September 1st 1923 devastated the area around Tokyo and the country’s main port of Yokohama. This paper uses the earthquake as a case study to inform our understanding of the economics of disasters and the history of market integration. It seeks to test two main assumptions: firstly, that shifting demand and supply curves consequent on a disaster will have some impact on prices; and secondly, that any local changes in the disaster region are likely to be diffused across a wider geographical area. We make use of a unique monthly wholesale price dataset for a number of cities across Japan, and our analysis suggests three main findings: that price changes in the affected areas immediately following the disaster were in most cases reflected in price changes in Japan’s provincial cities; that cities further away from the devastation witnessed smaller price changes than those nearer to the affected area; and that the observed pattern of price changes reflects the regional heterogeneity identified by scholars who have worked on market integration in Japan.

Suggested Citation

  • Hunter, Janet & Ogasawara, Kota, 2018. "Price shocks in regional markets: Japan's great Kantō Earthquake of 1923," LSE Research Online Documents on Economics 88348, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:88348
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    Cited by:

    1. Schneider, Eric & Ogasawara, Kota & Cole, Tim J., 2020. "The Effect of the Second World War on the Growth Pattern of Height in Japanese Children: Catch-up Growth, Critical Windows and," CEPR Discussion Papers 14808, C.E.P.R. Discussion Papers.

    More about this item

    JEL classification:

    • N0 - Economic History - - General
    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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