IDEAS home Printed from https://ideas.repec.org/p/ime/imedps/18-e-17.html

Black Market Prices during World War II in Japan: An Estimate Using the Hedonic Approach

Author

Listed:
  • Masato Shizume

    (Professor, Waseda University; Institute for Monetary and Economic Studies, the Bank of Japan (e-mail: masato.shizume@waseda.jp))

Abstract

This paper constructs a time series of data related to black- market prices of five goods (rice, sweet potatoes, potatoes, chicken eggs and sugar) during World War II (WWII) in Japan. It is the first attempt to capture the actual price fluctuation trends for individual products throughout the period during and after WWII. To this end, I have employed the hedonic approach, which is a methodology used to adjust for the quality of goods including the characteristics of counterparties and places of transaction in constructing the price data, to obtain estimates that are as unbiased as possible. The data reveals that 1) black-market prices of these goods soared during WWII to post 40-80 percent inflation on a quarterly basis toward the end of the war, 2) by the end of the war, black-market prices had already increased by over 50 times (in the case of sweet potatoes) or 700 times (in the case of sugar) compared with 1934 levels, prior to wartime inflation, indicating more severe inflation during the war than after the war, 3) the most severe period of inflation varied by product, peaking during the war for rice and sugar and after the war for sweet potatoes, potatoes and chicken eggs, and 4) black- market prices were generally higher in urban areas than in rural areas.

Suggested Citation

  • Masato Shizume, 2018. "Black Market Prices during World War II in Japan: An Estimate Using the Hedonic Approach," IMES Discussion Paper Series 18-E-17, Institute for Monetary and Economic Studies, Bank of Japan.
    • Handle: RePEc:ime:imedps:18-e-17
    as

    Download full text from publisher

    File URL: https://www.imes.boj.or.jp/research/papers/english/18-E-17.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Shigenori Shiratsuka, 1995. "Effects of Quality Changes on the Price Index: A Hedonic Approach to the Estimation of a Quality Adjusted Price Index for Personal Computers in Japan," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 13(1), pages 17-52, July.
    2. Mohsen Bahmani-Oskooee & Gour Goswami, 2006. "Military spending and the black market premium in developing countries," Review of Social Economy, Taylor & Francis Journals, vol. 64(1), pages 77-91.
    3. Pollak, Robert A., 1989. "The Theory of the Cost-of-Living Index," OUP Catalogue, Oxford University Press, number 9780195058703.
    4. Rockoff, Hugh, 1981. "Price and Wage Controls in Four Wartime Periods," The Journal of Economic History, Cambridge University Press, vol. 41(2), pages 381-401, June.
    5. Huff, Gregg & Majima, Shinobu, 2013. "Financing Japan's World War II Occupation of Southeast Asia," The Journal of Economic History, Cambridge University Press, vol. 73(4), pages 937-977, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Baubeau, Patrice & Teixeira, Mateo, 2024. "Inflation without politics: how French prices outsmarted bullets, 1938-1949," MPRA Paper 121621, University Library of Munich, Germany, revised 01 Aug 2024.
    2. Ryoji Koike, 2019. "Interpolation of Japan's Household Consumption during World War II," IMES Discussion Paper Series 19-E-07, Institute for Monetary and Economic Studies, Bank of Japan.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Banzhaf, H. Spencer, 2002. "Quality Adjustment for Spatially-Delineated Public Goods: Theory and Application to Cost-of-Living Indices in Los Angeles," RFF Working Paper Series dp-02-10-, Resources for the Future.
    2. Edgar O. Olsen & Dirk W. Early & Paul E. Carrillo, 2012. "This paper documents the production of a panel of price indices for housing services, other produced goods, and all produced goods for each metropolitan area in the United States and the non-metropolitan part of each state from 1982 through 2010 that," Virginia Economics Online Papers 402, University of Virginia, Department of Economics.
    3. Williamson, Jeffrey G. & Bassino, Jean-Pascal, 2015. "From Commodity Booms to Economic Miracles: Why Southeast Asian Industry Lagged Behind," CEPR Discussion Papers 10611, C.E.P.R. Discussion Papers.
    4. Erwin Diewert & John Greenlees & Charles R. Hulten, 2009. "Introduction: What Are the Issues?," NBER Chapters, in: Price Index Concepts and Measurement, pages 1-16, National Bureau of Economic Research, Inc.
    5. LaFrance, Jeffrey T., "undated". "U.S. Food and Nutrient Demand and the Effects of Agricultural Policies," New Economic Approaches to Consumer Welfare and Nutrition - FAMC 1999 Conference 260289, Food and Agricultural Marketing Consortium (FAMC).
    6. Lars Nesheim, 2006. "Hedonic price functions," CeMMAP working papers CWP18/06, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    7. Diewert, Erwin, 2009. "Cost of Living Indexes and Exact Index Numbers," Economics working papers erwin_diewert-2009-6, Vancouver School of Economics, revised 13 Feb 2009.
    8. Karen Alvarez & Richard Peach, 1996. "Core CPI: excluding food, energy ... and used cars?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 2(Apr).
    9. Kim Oosterlinck & Jeremy Simon, 2015. "Financial Repression and Bond Market Efficiency: the Case of Italy during World War II," Working Papers CEB 15-001, ULB -- Universite Libre de Bruxelles.
    10. Hausman, Jerry, 1999. "Cellular Telephone, New Products, and the CPI," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(2), pages 188-194, April.
    11. James Heckman, 2010. "Contributions of Zvi Griliches," NBER Chapters, in: Contributions in Memory of Zvi Griliches, pages 5-22, National Bureau of Economic Research, Inc.
    12. SAITO, Makoto & 齊藤, 誠, 2017. "On wartime money finance in the Japanese occupied territories during the Pacific War: The case of instant reserve banks as bad central banks," Discussion Papers 2017-03, Graduate School of Economics, Hitotsubashi University.
    13. Paul Schreyer & W. Erwin Diewert, 2014. "Household Production, Leisure, and Living Standards," NBER Chapters, in: Measuring Economic Sustainability and Progress, pages 89-114, National Bureau of Economic Research, Inc.
    14. Laura Blow & Richard Blundell, 2018. "A Nonparametric Revealed Preference Approach to Measuring the Value of Environmental Quality," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(3), pages 503-527, March.
    15. Marshall Reinsdorf & Jack E. Triplett, 2009. "A Review of Reviews: Ninety Years of Professional Thinking About the Consumer Price Index," NBER Chapters, in: Price Index Concepts and Measurement, pages 17-83, National Bureau of Economic Research, Inc.
    16. Carola Binder & Rupal Kamdar, 2022. "Expected and Realized Inflation in Historical Perspective," Journal of Economic Perspectives, American Economic Association, vol. 36(3), pages 131-156, Summer.
    17. Białek Jacek, 2019. "Remarks on Geo-Logarithmic Price Indices," Journal of Official Statistics, Sciendo, vol. 35(2), pages 287-317, June.
    18. Robert S. Martin, 2025. "Democratic Aggregation: Issues and Implications for Consumer Price Indexes," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 71(1), February.
    19. Chihiro Shimizu & W. Erwin Diewert, 2025. "Challenges in Consumer Price Index Construction," Working Papers e219, Tokyo Center for Economic Research.
    20. Dimitraki Ourania & Emmanouilidis Kyriakos & Asllani Alban, 2024. "Examining the Military Spending Economic Growth Nexus in the Presence of Informality: Evidence from the Balkan Peninsula," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 30(4), pages 505-523.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • N45 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Asia including Middle East

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ime:imedps:18-e-17. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kinken (email available below). General contact details of provider: https://edirc.repec.org/data/imegvjp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.