Monetization and Growth in Colonial New England, 1703-1749
20 Pages Posted: 9 Jul 2010
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: Suggested Citation