Working Paper: CEPR ID: DP17020
Authors: Carlos Charotti; Nuno Palma; João Pereira dos Santos
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 mid-seventeenth 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
Keywords: Resource Curse; Dutch Disease; State Capture; Early Modern Spain
JEL Codes: N13; O11; O57
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Influx of precious metals (N11) | Price level in Spain (P22) |
| Influx of precious metals (N11) | GDP per capita in Spain (O52) |
| GDP per capita in Spain (O52) | GDP per capita in Spain after 150 years (N14) |
| Influx of precious metals (N11) | Economic decline in Spain (N16) |
| Influx of precious metals (N11) | Resource curse effects (Q33) |
| Influx of precious metals (N11) | Dutch disease effects (Q33) |
| Influx of precious metals (N11) | State capture (P26) |