Discussion paper

DP17766 Crowding in during the Seven Years' War

We present a detailed study of the Seven Years’ War (1756–1763) using a new dataset based on the Bank of England minutes. We argue that the war and associated Bank of England actions led to a transformation of the financial system. Additionally, while there was short-term crowding out of private investment when interest rates rose due to the issue of war-related government debt, in the long-run there was crowding in: higher government spending led to an increase in private sector investment.


Palma, N and C Sissoko (2022), ‘DP17766 Crowding in during the Seven Years' War ‘, CEPR Discussion Paper No. 17766. CEPR Press, Paris & London. https://cepr.org/publications/dp17766