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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

Economics Discussion Paper Series from Economics, The University of Manchester

Abstract: Maritime disasters in the Spanish Empire (1531-1810) resulted in the loss of substantial amounts of silver money. We exploit this recurring natural experiment to estimate the effect that an exogenous change in the money supply has on the real economy. 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 channels 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.

JEL-codes: E43 E44 E52 N10 N13 (search for similar items in EconPapers)
Date: 2019-04, Revised 2022-05
New Economics Papers: this item is included in nep-fdg and nep-mon
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Working Paper: The vagaries of the sea: evidence on the real effects of money from maritime disasters in the Spanish Empire (2019) Downloads
Working Paper: The vagaries of the sea: evidence on the real effects of money from maritime disasters in the Spanish Empire (2019) Downloads
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