Abstract
Spain was one of the world’s richest countries and a first-rank European power around 1500.
Two centuries later it was a backwater. In this paper, we 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 in Spain increased by up to 200% more by the midseventeenth century. Spain’s GDP per capita outperformed other European nations for around
a century: by 1600, it was close to 40% higher than in its counterfactual. However, this effect
was reversed in the following 150 years: by 1750, GDP per capita was 40% lower than it would
have been if Spain had not been the first-wave receiver of the American treasure.
Two centuries later it was a backwater. In this paper, we 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 in Spain increased by up to 200% more by the midseventeenth century. Spain’s GDP per capita outperformed other European nations for around
a century: by 1600, it was close to 40% higher than in its counterfactual. However, this effect
was reversed in the following 150 years: by 1750, GDP per capita was 40% lower than it would
have been if Spain had not been the first-wave receiver of the American treasure.
| Original language | English |
|---|---|
| Publisher | The University of Manchester |
| Number of pages | 54 |
| Publication status | Published - Jan 2022 |
Publication series
| Name | Economics Discussion Paper Series |
|---|---|
| Publisher | The University of Manchester |
| No. | EDP-2201 |
Keywords
- Resource Curse
- Dutch Disease
- State Capture
- Early Modern Spain
- Augmented Synthetic Control
