Why Did Rice Prices Skyrocket in Post-War Taiwan?

In 1945 Taiwan shifted from Japanese to Chinese rule. During this transition, historians built the first high‑frequency rice price panel with monthly data from August 1945 to March 1947. Economists analysing the series identified four distinct stages. In the first stage, right after Japan's surrender, prices stayed flat because stocks were still plentiful. The second stage saw a sharp rise as trade routes broke, imports fell, and local demand surged. The third stage showed a modest dip thanks to price‑control measures introduced by the new government. Finally, the fourth stage experienced another climb when support policies weakened and famine deepened. Researchers matched these price movements with contemporary policy decisions, showing that government actions—export limits, subsidies, and warehouse controls—had a stronger effect than ordinary market forces. The main takeaway is that, during food crises, public policies can shape price trajectories more than traditional economic factors. The study highlights the vital role of smart resource management in emergencies.

The rice price dataset was assembled by merging local market records, Ministry of Agriculture bulletins, and diplomatic communications. Monthly frequency captures seasonal swings and sudden shocks, such as maritime route disruptions caused by naval mines. For statistical analysis, the authors employed fixed‑effects regression models to control for regional market differences, supplemented by dummy variables representing the four identified policy phases. Chow tests confirmed structural breaks in regression coefficients aligning with regime changes. Additionally, Granger causality tests were performed to verify whether price‑policy decisions preceded price movements, yielding significance at the 5% level. From a macroeconomic perspective, the model indicates that price‑control policies reduced volatility but did not eradicate underlying inflation, which remained tied to supply factors like reduced rice harvests due to adverse weather and loss of agricultural labor. This quantitative approach shows how high‑resolution historical data combined with modern econometric techniques can shed new light on food‑crisis dynamics in post‑war settings.