Work

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

Year: 2022

Type: article

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.

Source: The Review of Economics and Statistics

DOI: 10.1162/rest_a_01223

Authors: Adam Brzezinski, Yao Chen, Nuno Palma, Felix Ward

Institutions: London School of Economics and Political Science, Erasmus University Rotterdam, University of Lisbon, University of Manchester, Centre for Economic Policy Research

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

OpenAlex ID: W2991912554

FWCI: 1.381

Cites: 90

Cited by: 12

Related to: 10