The vagaries of the sea: evidence on the real effects of money from maritime disasters in the Spanish Empire

Brzezinski, Adam, Chen, Yao, Palma, Nuno and Ward, Felix (2024) The vagaries of the sea: evidence on the real effects of money from maritime disasters in the Spanish Empire. Review of Economics and Statistics, 106 (5). 1220 - 1235. ISSN 0034-6535

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Abstract

We estimate the effect of money supply changes on the real economy by exploiting a recurring natural experiment: maritime disasters in the Spanish Empire (1531–1810) that resulted in the loss of substantial amounts of silver money. We find that negative money supply shocks caused Spanish real output to decline. A transmission channel analysis highlights slow price adjustments and credit frictions as mechanisms through which money supply changes affected the real economy. Especially large output declines occurred in textile manufacturing against the backdrop of a credit crunch that impaired merchants’ ability to supply their manufacturers with inputs.

Item Type:	Article
Additional Information:	© 2022 The President and Fellows of Harvard College and the Massachusetts Institute of Technology
Divisions:	STICERD School of Public Policy ?? SCPP ??
Subjects:	H Social Sciences > HC Economic History and Conditions
Date Deposited:	20 Sep 2024 08:24
Last Modified:	18 Nov 2024 20:45
URI:	http://eprints.lse.ac.uk/id/eprint/125472

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