Monetization and Growth in Colonial New England, 1703-1749

20 Pages Posted: 9 Jul 2010

See all articles by Peter L. Rousseau

Peter L. Rousseau

Vanderbilt University - Department of Economics

Caleb Stroup

Davidson College

Multiple version iconThere are 2 versions of this paper

Date Written: July 8, 2010


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.

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

JEL Classification: E42, N11

Suggested Citation

Rousseau, Peter L. and Stroup, Caleb, Monetization and Growth in Colonial New England, 1703-1749 (July 8, 2010). Available at SSRN: or

Peter L. Rousseau (Contact Author)

Vanderbilt University - Department of Economics ( email )

Box 1819 Station B
Nashville, TN 37235
United States
615-343-2466 (Phone)
615-343-8495 (Fax)


Caleb Stroup

Davidson College ( email )

United States


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