EH.Net Abstracts in Economic History

AEH: EUR.MACRO: The 1628 Castilian Crydown: Test of Competing Theories

José I. García de Paso (jipaso at wanadoo.es)

Thu Oct 26 10:15:09 EDT 2000

                ABSTRACTS IN ECONOMIC HISTORY
                     (c) 2000 EH.Net
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Name:  José I. García de Paso
Email:  jipaso at wanadoo.es
Institution:  Universidad Complutense

Co-author:  none

Title:  The 1628 Castilian Crydown: A Test of Competing Theories of 
the Price Level

Internet Address of abstracted work:  not available

By mail:
Professor José I. García de Paso
Departamento de Análisis Económico
Universidad Complutense
28223 Madrid (Spain)

Language:  English

Abstract:
On August 7, 1628 the Castilian government halved overnight the 
nominal stock of money through the 50% crydown of its copper 
currency. The paper argues that this helicopter lift of money is a 
nice historical experiment in order to put to the test the empirical 
relevance of competing theories of the price level. The experiment 
shows how the post-crydown behavior of the price level predicted by 
the weak-form fiscal theory (the so-called Sargent-Wallace theory) 
matches actual data far better than the quantity theory (the 
so-called monetarist theory).

Bibliography: García de Paso, José I. "The 1628 Castilian Crydown: A 
Test of Competing Theories of the Price Level." Working paper (August 
2000).

Subject:  H
Geographical Area:  4
Country/Region:  Castile (Spain)
Time Period:  5
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