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Goldilocks: American precious metals and the Rise of the West

Author

Listed:
  • Yao Chen

    (Erasmus University Rotterdam and CEPR)

  • Nuno Palma

    (University of Manchester, Universidade de Lisboa & CEPR)

  • Felix Ward

    (Erasmus University Rotterdam)

Abstract

We estimate the contribution of the American precious metal windfall to West Eu- rope’s growth performance in the early modern period. The exogenous nature of American precious metal extraction allows for the identification of monetary effects. We find that American precious metals fostered West Europe’s growth by stimulating trade and capital accumulation. Our findings place West Europe’s second-stage receivers in a particularly fortunate goldilocks zone that enjoyed monetary stimulus, while being insulated against the transport-loss induced financial crises that caused persistent damage to first-stage receiver Spain.

Suggested Citation

  • Yao Chen & Nuno Palma & Felix Ward, 2022. "Goldilocks: American precious metals and the Rise of the West," Tinbergen Institute Discussion Papers 22-063/VI, Tinbergen Institute, revised 01 Jul 2024.
    • Handle: RePEc:tin:wpaper:20220063
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    Keywords

    money non-neutrality; Great Divergence; Little Divergence; Smithian growth; market integration;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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