The Price Revolution in the 16th Century: Empirical Results from a Structural Vectorautoregression Model

This paper provides empirical evidence in favor of the hypothesis that NEWLINE the secular price increase in the 16th century is mainly caused by money supply NEWLINE developments as the discovery of new mines in Latin America. First we review NEWLINE price developments for several European countries over the 16th century in the NEWLINE light of this hypothesis. Second the application of a SVAR model to annual time NEWLINE series of price indexes for Old Castile and Leon and New Castile over the 16th NEWLINE century indicates that not only the trend but also the short to medium variability of NEWLINE price movements in 16th century Spain are dominated by permanent money NEWLINE supply shocks.