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

Adam Brzezinski, Yao Chen, Nuno Palma and Felix Ward

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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.

Keywords: AAM; requested (search for similar items in EconPapers)
JEL-codes: N0 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2024-09-30
New Economics Papers: this item is included in nep-his and nep-mon
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Published in Review of Economics and Statistics, 30, September, 2024, 106(5), pp. 1220 - 1235. ISSN: 0034-6535

Downloads: (external link)
http://eprints.lse.ac.uk/125472/ Open access version. (application/pdf)

Related works:
Journal Article: The Vagaries of the Sea: Evidence on the Real Effects of Money from Maritime Disasters in the Spanish Empire (2024)
Working Paper: The vagaries of the sea: evidence on the real effects of money from maritime disasters in the Spanish Empire (2022)
Working Paper: The Vagaries of the Sea: Evidence on the Real Effects of Money from Maritime Disasters in the Spanish Empire (2022)
Working Paper: The vagaries of the sea: evidence on the real effects of money from maritime disasters in the Spanish Empire (2019)
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