Working Paper: CEPR ID: DP15509
Authors: Yao Chen; Nuno Palma; Felix Ward
Abstract: How did the Spanish money supply evolve in the aftermath of the discovery of large amounts of precious metals in Spanish America? We synthesize the available data on the mining of precious metals and their international flow to estimate the money supply for Spain from 1492 to 1810. Our estimate suggests that the Spanish money supply increased more than ten-fold. Viewed through the equation of exchange this money supply increase can account for most of the price level rise in early modern Spain
Keywords: early modern period; equation of exchange; quantity theory of money
JEL Codes: E31; E51; N13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Money Supply (M) (E51) | Price Levels (P) (E30) |
| Increase in Money Supply (M) (E51) | Price Levels (P) (E30) |
| Changes in Velocity (V) (E41) | Price Levels (P) (E30) |
| Real GDP Growth (Y) (O40) | Price Levels (P) (E30) |