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Crowding in During the Seven Years' War

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  • Nuno Palma
  • Carolyn Sissoko

Abstract

We present a detailed study of the Seven Years' War (1756–1763) using a new dataset based on the Bank of England minutes. We argue that the war and associated Bank of England actions led to a transformation of the financial system. Additionally, while there was short-term crowding out of private investment when interest rates rose due to the issue of war-related government debt, in the long-run there was crowding in: higher government spending led to an increase in private sector investment.

Suggested Citation

  • Nuno Palma & Carolyn Sissoko, 2022. "Crowding in During the Seven Years' War," Economics Discussion Paper Series 2211, Economics, The University of Manchester.
    • Handle: RePEc:man:sespap:2211
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    File URL: http://hummedia.manchester.ac.uk/schools/soss/economics/discussionpapers/EDP-2211.pdf
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    References listed on IDEAS

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    6. Patrick K O'Brien & Nuno Palma, 2020. "Danger to the Old Lady of Threadneedle Street? The Bank Restriction Act and the regime shift to paper money, 1797–1821," European Review of Economic History, European Historical Economics Society, vol. 24(2), pages 390-426.
    7. Patrick K. O'Brien & Nuno Palma, 2023. "Not an ordinary bank but a great engine of state: The Bank of England and the British economy, 1694–1844," Economic History Review, Economic History Society, vol. 76(1), pages 305-329, February.
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    More about this item

    Keywords

    Bank of England; City of London; discount market; interest rates; crowding in; financial history;
    All these keywords.

    JEL classification:

    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • N43 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: Pre-1913

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