Correlations between Natural Disasters and Price Indices in China during 1644-1911

Abstract

The disruption of natural disasters in agriculture is often seen to have influenced price indices to some extent over a certain period, especially in a relatively isolationist, predominantly agricultural economy such as ancient China. Here we use the information about historical disasters kept in Qing History - Treatise on Famine and Relief and the price indices for each year from 1644 to 1911, exploring the correlation between natural disasters and price indices. We next discuss the other factors that have an impact on the price index to reveal the dynamics of the influence of natural disasters on the price index. Results show that there is a weak correlation between natural disasters and price indices in general, but we find a strong correlation over a long time, and the correlation coefficient rises somewhat in the early Qing, and then decreases with time. We further show that factors such as production capacity, foreign trade and silver flows also had an impact on the price indices no less than natural disasters, and it is clear that the impact of these factors caused the correlation coefficient to change over time.