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All that Glitters: Precious Metals, Rent Seeking and the Decline of Spain

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Author Info

  • Mauricio Drelichman

    (The University of British Columbia)

Abstract

The windfall acquisition of precious metals from American mines and the military revolution of the Early Modern age allowed the Spanish monarchs to command large amounts of credit andpursue an expansive imperial policy unlike that of any other Early Modern nation; when the costof the Empire increased and mineral rents fell, the Crown auctioned off privileges and tax exemptions to fund its military efforts. I document how the silver windfall was linked to thecredit expansion and the undertaking of imperial policy. I then develop a model that shows howsuch a policy led Spain down a rent-seeking spiral, and accounts for the persistence of high rent seeking and slow growth even after the imperial policy was abandoned.

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File URL: http://128.118.178.162/eps/eh/papers/0404/0404002.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Economic History with number 0404002.

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Length: 46 pages
Date of creation: 13 Apr 2004
Date of revision:
Handle: RePEc:wpa:wuwpeh:0404002

Note: Type of Document - pdf; pages: 46
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Web page: http://128.118.178.162

Related research

Keywords: Early Modern Spain; Rent Seeking; Natural Resource Shocks; Taxation; Privileges; Public Debt; Institutional Lock-in;

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References

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  1. Asea, Patrick K. & Lahiri, Amartya, 1999. "The precious bane," Journal of Economic Dynamics and Control, Elsevier, vol. 23(5-6), pages 823-849, April.
  2. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1990. "The Allocation of Talent: Implications for Growth," NBER Working Papers 3530, National Bureau of Economic Research, Inc.
  3. Baland, Jean-Marie & Francois, Patrick, 2000. "Rent-seeking and resource booms," Journal of Development Economics, Elsevier, vol. 61(2), pages 527-542, April.
  4. Mauricio Drelichman, 2004. "The Curse of Moctezuma: American Silver and the Dutch Disease, 1501-1650," Economic History 0404001, EconWPA.
  5. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1993. "Why Is Rent-Seeking So Costly to Growth?," American Economic Review, American Economic Association, vol. 83(2), pages 409-14, May.
  6. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 803-832, December.
  7. Torvik, Ragnar, 2002. "Natural resources, rent seeking and welfare," Journal of Development Economics, Elsevier, vol. 67(2), pages 455-470, April.
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Cited by:
  1. Berumen, Sergio A., 2012. "Evaluación del impacto de la política de incentivos sectoriales en el desarrollo de los municipios mineros de Castilla y León," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 17(33), pages 15-30.
  2. Vidal-Robert, Jordi, 2013. "War and Inquisition: Repression in Early Modern Spain," CAGE Online Working Paper Series 119, Competitive Advantage in the Global Economy (CAGE).
  3. repec:cge:warwcg:118 is not listed on IDEAS
  4. Vidal-Robert, Jordi, 2014. "Long-run effects of the Spanish Inquisition," CAGE Online Working Paper Series 192, Competitive Advantage in the Global Economy (CAGE).
  5. Nils-Petter Lagerlöf & Thomas Tangerås, 2008. "From rent seeking to human capital: a model where resource shocks cause transitions from stagnation to growth," Canadian Journal of Economics, Canadian Economics Association, vol. 41(3), pages 760-780, August.

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