Was Economic Growth Likely in Lower Canada?

Accepted for publication in Journal of Private Enterprise

24 Pages Posted: 25 Aug 2016 Last revised: 7 Sep 2017

See all articles by Mathieu Bédard

Mathieu Bédard

Montreal Economic Institute; Aix-Marseille University - Aix-Marseille School of Economics

Vincent Geloso

Bates College

Multiple version iconThere are 2 versions of this paper

Date Written: August 23, 2016

Abstract

Generally, the historical literature presents the period from 1817 to 1851 in Lower Canada (modern day Quebec) as one of negative economic growth. This period also coincides with the rise of free banking in the colony. We study the effects of free banking on economic growth using theoretical and empirical validations. Using the Equation of Exchange, we propose that given the increase in the stock of money and the reduction in the general price level, there must have been a positive rate of growth of income per capita during the period. Our theoretical discussion should conclusively end any debate over whether or not Lower Canada enjoyed a positive rate of economic growth. The only question remaining is why it was slower than that of the United States and the rest of Canada.

Keywords: Economic Growth, Free Banking, Price Level, Private Money

JEL Classification: N11, N21, E31

Suggested Citation

Bédard, Mathieu and Geloso, Vincent, Was Economic Growth Likely in Lower Canada? (August 23, 2016). Accepted for publication in Journal of Private Enterprise. Available at SSRN: https://ssrn.com/abstract=2828311 or http://dx.doi.org/10.2139/ssrn.2828311

Mathieu Bédard

Montreal Economic Institute ( email )

910, rue Peel, bureau 600
Montreal, Quebec J7R 6Y9
Canada
514 273-0969 (Phone)
514 273-2581 (Fax)

HOME PAGE: http://www.iedm.org/

Aix-Marseille University - Aix-Marseille School of Economics ( email )

2 rue de la Charité
Marseille, 13236
France

Vincent Geloso (Contact Author)

Bates College ( email )

Department of Economics
Lewiston, ME
United States

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