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American treasure and the decline of Spain

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  • Palma, Nuno
  • Charotti, Carlos Javier
  • dos Santos, Joao Pereira

Abstract

Spain was one of the world’s richest countries and a first-rank European power around 1500. Two centuries later it was a backwater. In this paper, we study the long-run impact of the influx of silver from the New World since 1500 for the economic development of Spain. Compared with a synthetic counterfactual, the price level in Spain increased by up to 200% more by the mid-seventeenth century. Spain's GDP per capita outperformed other European nations for around a century: by 1600, it was close to 40% higher than in its counterfactual. However, this effect was reversed in the following 150 years: by 1750, GDP per capita was 40% lower than it would have been if Spain had not been the first-wave receiver of the American treasure

Suggested Citation

  • Palma, Nuno & Charotti, Carlos Javier & dos Santos, Joao Pereira, 2022. "American treasure and the decline of Spain," CEPR Discussion Papers 17020, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17020
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    More about this item

    Keywords

    Dutch disease; Resource curse; Early modern spain; State capture;
    All these keywords.

    JEL classification:

    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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