The Vagaries of the Sea: Evidence on the Real Effects of Money from Maritime Disasters in the Spanish Empire

Yao Chen; Felix Ward; Nuno Palma; Adam Brzezinski

doi:10.1162/rest_a_01223

The Vagaries of the Sea: Evidence on the Real Effects of Money from Maritime Disasters in the Spanish Empire

Yao Chen, Felix Ward, Nuno Palma, Adam Brzezinski

Economics

Research output: Contribution to journal › Article › Academic › peer-review

4 Citations (Scopus)

30 Downloads (Pure)

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.

Original language	English
Pages (from-to)	1220-1235
Number of pages	16
Journal	Review of Economics and Statistics
Volume	106
Issue number	5
Early online date	26 Jul 2022
DOIs	https://doi.org/10.1162/rest_a_01223
Publication status	Published - Sept 2024

Bibliographical note

JEL Codes: E43, E44, E52, N10, N13

Publisher Copyright:
© 2022 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Access to Document

10.1162/rest_a_01223

rest_a_01223Final published version, 1.01 MBLicence: Article 25fa Dutch Copyright Act

Cite this

@article{1f0282d81f0141a3bd9c0d3f533e0e3f,

title = "The Vagaries of the Sea: Evidence on the Real Effects of Money from Maritime Disasters in the Spanish Empire",

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.",

author = "Yao Chen and Felix Ward and Nuno Palma and Adam Brzezinski",

note = "JEL Codes: E43, E44, E52, N10, N13 Publisher Copyright: {\textcopyright} 2022 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.",

year = "2024",

month = sep,

doi = "10.1162/rest\_a\_01223",

language = "English",

volume = "106",

pages = "1220--1235",

journal = "Review of Economics and Statistics",

issn = "0034-6535",

publisher = "MIT Press Journals",

number = "5",

}

TY - JOUR

T1 - The Vagaries of the Sea: Evidence on the Real Effects of Money from Maritime Disasters in the Spanish Empire

AU - Chen, Yao

AU - Ward, Felix

AU - Palma, Nuno

AU - Brzezinski, Adam

PY - 2024/9

Y1 - 2024/9

N2 - 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.

AB - 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.

UR - https://www.scopus.com/pages/publications/85204198705

U2 - 10.1162/rest_a_01223

DO - 10.1162/rest_a_01223

M3 - Article

SN - 0034-6535

VL - 106

SP - 1220

EP - 1235

JO - Review of Economics and Statistics

JF - Review of Economics and Statistics

IS - 5

ER -

The Vagaries of the Sea: Evidence on the Real Effects of Money from Maritime Disasters in the Spanish Empire

Abstract

Bibliographical note

Access to Document

Other files and links

Fingerprint

Cite this