The thesis aims to investigate the causes of the Household Responsibility System (HRS) Reform in China during 1978-1982 and its departure from the Skinner (1985)’s policy cyclicality. Since the HRS was considered to be the cornerstone of China’s market reform, it is expected that answering our main research questions will help analyze China’s broader economic transformation. Both historical review and theoretical model adopted in this thesis suggest that the political dynamics between farmers, local governments and the central government provide the most plausible explanation to the commence and success of the HRS reform during 1978-1982.
Although it was conventionally thought the Mao’s death was the main reasons for the HRS reform, the comparison of the respective simulation results under the with-shock and without-shock scenarios illustrates the HRS reform could be achieved without the external shock caused by the individual events such as Mao’s Death. The comparative statics derived from the theoretical model illustrate the continuous potential agricultural output growth and famers‟ high preference to the agricultural output played significant roles on inducing the inter-agent political dynamics. It indicates the HRS reform in China during 1978-1982 is more likely to be an induced institutional change instead of an imposed institutional change proposed by Lin (1989). The thesis also proposes potential extensions of the model into other scenarios at the end.