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The Price Revolution in the 16th Century: Empirical Results from a Structural Vectorautoregression Model

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Listed:
  • Bernholz, Peter
  • Kugler, Peter

Abstract

This paper provides empirical evidence in favor of the hypothesis that NEWLINE the secular price increase in the 16th century is mainly caused by money supply NEWLINE developments as the discovery of new mines in Latin America. First we review NEWLINE price developments for several European countries over the 16th century in the NEWLINE light of this hypothesis. Second the application of a SVAR model to annual time NEWLINE series of price indexes for Old Castile and Leon and New Castile over the 16th NEWLINE century indicates that not only the trend but also the short to medium variability of NEWLINE price movements in 16th century Spain are dominated by permanent money NEWLINE supply shocks.

Suggested Citation

  • Bernholz, Peter & Kugler, Peter, 2007. "The Price Revolution in the 16th Century: Empirical Results from a Structural Vectorautoregression Model," Working papers 2007/12, Faculty of Business and Economics - University of Basel.
    • Handle: RePEc:bsl:wpaper:2007/12
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    References listed on IDEAS

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    1. Kindleberger, C.P., 1998. "Economic and Financial Crises and Transformations in Sixteenth-Century Europe," Princeton Essays in International Economics 208, International Economics Section, Departement of Economics Princeton University,.
    2. Blanchard, Olivier Jean & Quah, Danny, 1989. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," American Economic Review, American Economic Association, vol. 79(4), pages 655-673, September.
    3. Serena Ng & Pierre Perron, 2001. "LAG Length Selection and the Construction of Unit Root Tests with Good Size and Power," Econometrica, Econometric Society, vol. 69(6), pages 1519-1554, November.
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    Cited by:

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    2. Lucas Papademos, 2007. "The Effects of Globalization on Inflation, Liquidity and Monetary Policy," NBER Chapters, in: International Dimensions of Monetary Policy, pages 593-608, National Bureau of Economic Research, Inc.
    3. William VanLear, 2015. "Copernicus and the Quantity Theory of Money," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 2015(2), pages 5-20.

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    More about this item

    Keywords

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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