American treasure and the decline of Spain

Carlos J. Charotti, Nuno Palma and João Pereira dos Santos

European Economic Review, 2025, vol. 180, issue C

Abstract: Spain was one of the world’s richest countries around 1500. Two centuries later it was a backwater. We rely on a synthetic control methodology to study the long-run impact of the influx of silver from the New World since 1500 for the economic development of Spain. Compared with a synthetic counterfactual, the price level increased by up to 200% by the mid-seventeenth century. Spain’s GDP per capita outperformed other European nations for around a century, but by 1750, GDP per capita was around 40% lower than it would have been if Spain had not been the first-stage receiver of the American treasure.

Keywords: Resource curse; Dutch disease; State capture; Early modern Spain; Augmented synthetic control (search for similar items in EconPapers)
JEL-codes: N13 O11 O57 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:180:y:2025:i:c:s0014292125002375

DOI: 10.1016/j.euroecorev.2025.105187

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