On the efficiency of markets for agricultural products: Rice prices and capital markets in Java']Java, 1823-1853

I use rice prices in three cities to analyze the efficiency of the marketing system and the institutional framework of Javanese agriculture, 1823-1853. 1 show that imperfections in rural capital markets caused the extreme fluctuations in rice prices and that the segmentation of the capital market modifies the McCloskey and Nash interpretation of the relationship between seasonal fluctuations of grain (or rice) prices and interest rates. I argue that these fluctuations proxy peasants' stress. Finally, I hypothesize that institutional and market failures explain the "noneconomic" behavior of Javanese peasants in Boeke's theory of dualistic economic development.