American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Communication Infrastructure and Stabilizing Food Prices: Evidence from the Telegraph Network in China
American Economic Journal: Applied Economics
vol. 13,
no. 3, July 2021
(pp. 65–101)
Abstract
This paper exploits a unique historical setting―the expansion of the telegraph network in nineteenth-century China when railroads were limited―to examine whether the reduction of information frictions stabilizes grain prices. Employing a difference-in-difference (DID) strategy, we find that the telegraph access (i) reduced both the magnitude and the incidence of extreme prices; (ii) mitigated price responses to local weather shocks but increased the responsiveness to shocks in other telegraph-connected regions; (iii) affected the price volatility in a mean-reverting pattern; i.e., volatility rose in previously price-stable regions, and volatility decreased in price-unstable regions.Citation
Gao, Pei, and Yu-Hsiang Lei. 2021. "Communication Infrastructure and Stabilizing Food Prices: Evidence from the Telegraph Network in China." American Economic Journal: Applied Economics 13 (3): 65–101. DOI: 10.1257/app.20190416Additional Materials
JEL Classification
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- L96 Telecommunications
- N55 Economic History: Agriculture, Natural Resources, Environment, and Extractive Industries: Asia including Middle East
- N75 Economic History: Transport, Trade, Energy, Technology, and Other Services: Asia including Middle East
- O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
- O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- Q11 Agriculture: Aggregate Supply and Demand Analysis; Prices