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Monetization and Growth in Colonial New England, 1703-1749

Author

Listed:
  • Caleb Stroup

    () (Department of Economics, Davidson College)

  • Peter Rousseau

    () (Department of Economics, Vanderbilt University)

Abstract

We examine econometrically the real effects of paper money's introduction into colonial New England over the 1703-1749 period. Departing from earlier analyses that focus primarily on the depreciation of paper money in the region, we show that expansion of the money stock promoted growth in modern sector activity and not the other way around. We also find that bills emitted for seigniorage purposes had a positive effect on the modern sector, while bills issued through loan banks did not. Publication Status: Published in Explorations in Economic History, 2011, 48(4):600-613

Suggested Citation

  • Caleb Stroup & Peter Rousseau, 2010. "Monetization and Growth in Colonial New England, 1703-1749," Working Papers 10-01, Davidson College, Department of Economics.
  • Handle: RePEc:dav:wpaper:10-01
    as

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    References listed on IDEAS

    as
    1. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
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    4. Peter L. Rousseau, 2007. "Backing, the Quantity Theory, and the Transition to the US Dollar, 1723–1850," American Economic Review, American Economic Association, vol. 97(2), pages 266-270, May.
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    6. Rousseau, Peter L. & Sylla, Richard, 2005. "Emerging financial markets and early US growth," Explorations in Economic History, Elsevier, vol. 42(1), pages 1-26, January.
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    Cited by:

    1. Muhammad Zia Ullah Khan & Muhammad Illyas & Muqqadas Rahman & Chaudhary Abdul Rahman, 2015. "Money Monetization and Economic Growth in Pakistan," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(4), pages 184-192, April.
    2. repec:spr:joecth:v:65:y:2018:i:4:d:10.1007_s00199-017-1040-5 is not listed on IDEAS
    3. Farley Grubb, 2012. "Is Paper Money Just Paper Money? Experimentation and Variation in the Paper Monies Issued by the American Colonies from 1690 to 1775," NBER Working Papers 17997, National Bureau of Economic Research, Inc.
    4. Farley Grubb, 2014. "A New Approach to Solving the Colonial Monetary Puzzle: Evidence from New Jersey, 1709-1775," NBER Working Papers 19903, National Bureau of Economic Research, Inc.
    5. Farley Grubb, 2014. "A New Approach to Explaining the Value of Colonial Paper Money: Evidence from New Jersey, 1709-1775," Working Papers 14-08, University of Delaware, Department of Economics.
    6. Farley Grubb, 2013. "Colonial New Jersey's Paper Money Regime, 1709-1775: A Forensic Accounting Reconstruction of the Data," NBER Working Papers 19710, National Bureau of Economic Research, Inc.
    7. Muhammad Zia Ullah Khan & Chaudhary Abdul Rahman, 2015. "Money, Monetization and Economic Growth in Pakistan," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(3), pages 95-104, March.
    8. Maxime Menuet & Alexandru Minea & Patrick Villieu, 2018. "Deficit, monetization, and economic growth: a case for multiplicity and indeterminacy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(4), pages 819-853, June.

    More about this item

    Keywords

    Paper money; bills of credit; seigniorage; land bank; colonial America; Finance and growth; vector error correction model;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913

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