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Market efficiency and government interventions in prewar Japanese rice futures markets

  • Mikio Ito (a1), Kiyotaka Maeda (a2) and Akihiko Noda (a3)


This study analyzes how the colonial rice trade in prewar Japan affected its rice market, considering several government interventions in the two rice futures exchanges in Tokyo and Osaka. We explore the interventions in the futures markets using two procedures. First, we measure the joint degree of efficiency in the markets using a time-varying vector autoregression model. Second, we examine historical events that possibly affected the markets and focus on one event at a time. The degree of efficiency varies over time within our sample period (1881-1932). The observation, together with historical analysis, leads to the following conclusions: (1) the two major markets in Tokyo and Osaka were nearly efficient; (2) government interventions involving the delivery of imported rice from Taiwan and Korea often reduced futures market efficiency; finally, (3) this relationship continued as long as the quality difference between imported and domestic rice existed. The government interventions that promoted domestic distributions of the colonial goods resulted in confusion in the commodity markets, and decreased efficiency of the markets in the metropole.


Corresponding author

Corresponding author: A. Noda, Faculty of Economics, Kyoto Sangyo University, Motoyama, Kamigamo, Kita-ku, Kyoto 603-8555, Japan; email:;


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We would like to thank the editor, Stefano Battilossi, three anonymous referees, Shigehiko Ioku, Junsoo Lee, Kris Mitchener, Chiaki Moriguchi, Tetsuji Okazaki, Minoru Omameuda, Rainer Schüssler, Masato Shizume, Yasuo Takatsuki, Tatsuma Wada, Wako Watanabe and Asobu Yanagisawa for their helpful comments and suggestions. We would also like to thank seminar and conference participants at Wakayama University, the Japanese Economics Association 2014 Spring Meeting, the 84th Annual Conference of the Socio-Economic History Society and the 89th Annual Conference of the Western Economic Association International for helpful discussions. We also thank the Japan Society for the Promotion of Science for their financial assistance as provided through the Grant in Aid for Scientific Research nos. 26380397 (Mikio Ito), 26780199 (Kiyotaka Maeda) and 15K03542 (Akihiko Noda). All data and analysis codes used for this study are available on request.



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Market efficiency and government interventions in prewar Japanese rice futures markets

  • Mikio Ito (a1), Kiyotaka Maeda (a2) and Akihiko Noda (a3)


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