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Local Granaries and Central Government Disaster Relief: Moral Hazard and Intergovernmental Finance in Eighteenth- and Nineteenth-Century China

Published online by Cambridge University Press:  29 March 2004

CAROL H. SHIUE
CAROL H. SHIUE
Affiliation:
Assistant Professor, Department of Economics, University of Texas, Austin, TX 78712-1173. E-mail: shiue@eco.utexas.edu.
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Abstract

During the eighteenth and nineteenth centuries, the Chinese state attempted to administer famine relief partly through a nationwide institution of local granaries. This article explores regional variations in the performance of this institution to understand the reasons for its ultimate breakdown. The evidence suggests granary storage levels were systematically lower in provinces that received more frequent central government disaster relief; and an unintended consequence of disaster relief was that it modified local incentives for self-insurance and led to an incompletely resolved moral-hazard problem. China's experience provides an instructive example of the long-term dynamics present in intergovernmental policies.

Type
ARTICLES
Information
The Journal of Economic History , Volume 64 , Issue 1 , March 2004 , pp. 100 - 124
Copyright
© 2004 The Economic History Association

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