Research Archive

Working Paper, 2010

Publication type: Working paper

Research Archive Topic: Business Economics and Public Policy, World Business

Abstract

This paper presents new facts about China's Great Famine and develops a theory of famine to explain them. First, in 1959, when the famine began, food production was almost three times more than population subsistence needs. Second, we uncover a very surprising fact: regions with higher per capita food production that year suffered higher famine mortality rates, a reversal of the typically negative correlation. Existing theories for famine cannot easily explain this puzzling pattern. Therefore, we develop a theory of government policy under central planning where policy is inflexible because the government is unable to easily collect and respond to new information. In the presence of an aggregate shock to production, a famine with the spatial patterns we uncover can occur. The model also provides a unified framework that illustrates the contributions of other existing explanations in amplifying the magnitude of the famine. Moreover, it allows us to assess the benefits of price versus quantity controls in the Chinese context.

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