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Goldilocks: American precious metals and the Rise of the West

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  • Palma, Nuno
  • Chen, Yao
  • Ward, Felix

Abstract

We estimate the contribution of the American precious metal windfall to West Europe's growth performance in the early modern period. The exogenous nature of American money arrivals allows for the identification of monetary effects. We find that more than half of West Europe’s growth can be attributed to American precious metals, whose arrival promoted trade intensification and capital formation. Our findings place West Europe's second-stage receivers in a particularly fortunate goldilocks zone that enjoyed monetary injections, while being insulated against the transport-loss induced financial crises that caused persistent damage to first-stage receiver Spain.

Suggested Citation

  • Palma, Nuno & Chen, Yao & Ward, Felix, 2023. "Goldilocks: American precious metals and the Rise of the West," CEPR Discussion Papers 17919, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17919
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    More about this item

    Keywords

    market integration;

    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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