Discussion paper

DP17020 American treasure and the decline of Spain

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


Charotti, C, N Palma and J dos Santos (2022), ‘DP17020 American treasure and the decline of Spain‘, CEPR Discussion Paper No. 17020. CEPR Press, Paris & London. https://cepr.org/publications/dp17020