| Publications [#237928] of Charles M. Becker
Journal Articles
- Quddus, M; Becker, CM, Speculative Price Bubbles in the Rice Market and the 1974 Bangladesh Famine,
Journal of Economic Development, vol. 25 no. 2
(December, 2000),
pp. 155-175 [PDF]
(last updated on 2024/04/18)
Abstract: This paper investigates the role played by speculative
price bubbles in destabilizing food markets in Bangladesh
during the 1974 famine. The hypothesis of speculative
price bubbles in the rice market is tested using weekly
price data. These tests are based on a theoretical model
of storable food markets in which agents exhibit rational
expectations. It is shown that such markets are
susceptible to destabilizing trends by self-fulfilling
expectations. While "explosive price bubbles" have
received extensive attention in macroeconomics, they have
not been used in development economics to explain famines.
Amartya Sen has hypothesized that speculative forces are a
possible source of instability in the food market. Our
empirical tests based on techniques from the recent
literature on price bubbles lend some credence to the
hypothesis that excessive speculation may have produced
price bubbles in the rice market which directly
contributed to the Bangladesh famine in 1974.
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