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Nuno Palma

The University of Manchester, Economics, Faculty Member

Universidade de Lisboa, Instituto de Ciencias Sociais, Research Fellow

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Professor of Economics
Director of the Arthur Lewis Lab for Comparative Development, University of Manchester
Address: https://sites.google.com/site/npgpalma/home

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Heriot-Watt University

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London School of Economics and Political Science

Patricia Bernal Cortes

Claudio Marsilio

Università di Verona

Dennis O. Flynn

University of the Pacific

Claudia Jefferies

University College London

Rutgers, The State University of New Jersey

Jaco Zuijderduijn

Lund University

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Papers by Nuno Palma

The Real Effects of Monetary Expansions: Evidence from a Large-scale Historical Experiment

Review of Economic Studies, 2022

The discovery of massive deposits of precious metals in America during the early modern period ca... more The discovery of massive deposits of precious metals in America during the early modern period caused an exogenous monetary injection to Europe's money supply. I use this episode to identify the causal effects of money. Using a panel of six European countries, I find that monetary expansions had a material impact on real economic activity. The magnitudes are substantial and persist for a long time: an exogenous 10% increase in the production of precious metals in America measured relative to the European stock leads to a front-loaded response of output and, to a lesser extent, inflation. There was a positive humpshaped response of real GDP, with a cumulative increase up to 0.9% six to nine years later. The evidence suggests that this is because prices responded to monetary injections with considerable lags.

The efficiency of the Chinese silver standard, 1920-33

Journal of Economic History, 2021

We test for integration of financial markets in China during 1920-1933 using a new dataset of dom... more We test for integration of financial markets in China during 1920-1933 using a new dataset of domestic exchange rates. Our data concerns tael-denominated telegraphic transfers between Shanghai and nine other cities. We find that Chinese financial markets, as measured by the efficiency of silver-point arbitrage, were highly integrated among major commercial hubs in north and central China, but there was a lower level of integration for more remote cities in the south. Our paper presents the first comprehensive assessment of the efficiency of the Chinese silver standard, and contributes to a revaluation of market performance during pre-communist China.

Comparative European Institutions and the Little Divergence, 1385-1800. CGEH Working Paper Series

Why did the countries which first benefited from access to the New World -Castile and Portugal -d... more Why did the countries which first benefited from access to the New World -Castile and Portugal -decline relative to their followers, especially England and the Netherlands? The dominant narrative is that worse initial institutions at the time of the opening of Atlantic trade explain Iberian divergence. In this paper, we build new quantitative measures which allow for a comparison of institutional quality over time. We consider the frequency and nature of parliamentary meetings, the frequency and intensity of extraordinary taxation and coin debasement, and real interest spreads for public debt. We find no evidence that the political institutions of Iberia were worse at least until the English Civil War.

From convergence to divergence: Portuguese economic growth, 1527-1850

Journal of Economic History, 2019

We construct the first time-series for Portugal’s per capita GDP for 1527–1850, drawing on a new ... more We construct the first time-series for Portugal’s per capita GDP for 1527–1850, drawing on a new database. Starting in the early 1630s there was a highly persistent upward trend which accelerated after 1710 and peaked 40 years later. At that point, per capita income was high by European standards, though behind the most advanced Western European economies. But as the second half of the eighteenth century unfolded, a phase of economic decline was initiated. This continued into the nineteenth century, and by 1850 per capita incomes were not different from what they had been in the early 1530s.

Reconstruction of money supply over the long-run: the case of England, 1270-1870

Economic History Review, 2018

This article provides a time series of coin and money supply estimates for six hundred years of E... more This article provides a time series of coin and money supply estimates for six hundred years of English history. Two main estimation methods are proposed. The first (the direct method) is used to measure the value of government‐provided, legal‐tender coin supply only. Two varieties of the direct method are proposed. Additionally, an indirect method is proposed which relies on a combination of information about nominal GDP with an assumption regarding the evolution of velocity in time, and which can be used to calculate coin supply and M2. Both methods rely on benchmark values known for certain years, but no particular benchmark is determinant for the results. The new methodologies set out here may serve as a blueprint for a similar reconstruction of coin and money supply series for other economies for which analogous data are available.

Danger to the old lady of Threadneedle street? the bank restriction act and the regime shift to paper money, 1797-1821

European Reivew of Economic History, 2020

The Bank Restriction Act of 1797 made legal the Bank of England's suspension of the convertibilit... more The Bank Restriction Act of 1797 made legal the Bank of England's suspension of the convertibility of its banknotes. The current historical consensus is that it was a result of the state's need to finance the war, France's remonetisation, a loss of confidence in the English country banks, and a run on the Bank of England's reserves. We argue that while these factors help us understand the timing of the Restriction period, they cannot explain its success. We deploy new long-term data which leads us to a complementary explanation: the policy succeeded thanks to the reputation of the Bank of England, achieved through a century of monetary stability.

Money and Modernization in Early Modern England

Financial History Review, 2018

Classic accounts of the English industrial revolution present a long period of stagnation followe... more Classic accounts of the English industrial revolution present a long period of stagnation followed by a fast take-off. However, recent findings of slow but steady per capita economic growth suggest that this is a historically inaccurate portrait of early modern England. This growth pattern was in part driven by specialization and structural change accompanied by an increase in market participation at both the intensive and extensive levels. These, I argue, were supported by the gradual increase in money supply made possible by the importation of precious metals from America. They enabled a substantial increase in the monetization and liquidity levels of the economy, hence decreasing transaction costs, increasing market thickness, changing the relative incentive for participating in the market and allowing agglomeration economies to arise. By making trade with Asia possible, precious metals also induced demand for new desirable goods, which in turn encouraged market participation. Finally, the increased monetization and market participation made tax collection easier. This helped the government to build up fiscal capacity and as a consequence to provide for public goods. The structural change and increased market participation that ensued paved the way for modernization.

The real effects of monetary expansions: evidence from a large-scale historical experiment

Review of Economic Studies, 2021

The discovery of massive deposits of precious metals in America during the early modern period ca... more The discovery of massive deposits of precious metals in America during the early modern period caused an exogenous monetary injection to Europe's money supply. I use this episode to identify the causal effects of money. Using a panel of six European countries, I find that monetary expansions had a material impact on real economic activity. The magnitudes are substantial and persist for a long time: an exogenous 10% increase in the production of precious metals in America measured relative to the European stock leads to a frontloaded response of output and, to a lesser extent, inflation. There was a positive humpshaped response of real GDP, with a cumulative increase up to 0.9% six to nine years later. The evidence suggests that this is because prices responded to monetary injections with considerable lags.

The Great Escape? The Contribution of the Empire to Portugal's Economic Growth, 1500-1800

European Reivew of Economic History, 2015

Newly assembled macroeconomic statistics for early modern Portugal reveal one of Europe's most vi... more Newly assembled macroeconomic statistics for early modern Portugal reveal one of Europe's most vigorous colonial traders but one of its least successful growth records. Was the empire a blessing or a drag to the economy? Using an estimated dynamic model, we conclude that intercontinental trade had a substantial and increasingly positive impact on economic growth. In the heyday of colonial expansion, eliminating the economic links to empire would have reduced Portugal's per capita income by at least a fifth. While the empire helped the domestic economy, it was not sufficient to annul the tendency of the latter toward decline in relation to Europe's advanced core, which began to set in from the seventeenth century onward, but only became definite after 1800. We conclude that the explanation for Portugal's long-term backwardness must be sought primarily in domestic conditions.

History of Economics or a Selected History of Economics

Journal of The History of Economic Thought, 2008

Word Count: 74 (abstract), 4,887 (main text), 774 (endnotes).

The Real Effects of Monetary Expansions: Evidence from a Large-scale Historical Experiment

Review of Economic Studies, 2022

The discovery of massive deposits of precious metals in America during the early modern period ca... more The discovery of massive deposits of precious metals in America during the early modern period caused an exogenous monetary injection to Europe's money supply. I use this episode to identify the causal effects of money. Using a panel of six European countries, I find that monetary expansions had a material impact on real economic activity. The magnitudes are substantial and persist for a long time: an exogenous 10% increase in the production of precious metals in America measured relative to the European stock leads to a front-loaded response of output and, to a lesser extent, inflation. There was a positive humpshaped response of real GDP, with a cumulative increase up to 0.9% six to nine years later. The evidence suggests that this is because prices responded to monetary injections with considerable lags.

The efficiency of the Chinese silver standard, 1920-33

Journal of Economic History, 2021

We test for integration of financial markets in China during 1920-1933 using a new dataset of dom... more We test for integration of financial markets in China during 1920-1933 using a new dataset of domestic exchange rates. Our data concerns tael-denominated telegraphic transfers between Shanghai and nine other cities. We find that Chinese financial markets, as measured by the efficiency of silver-point arbitrage, were highly integrated among major commercial hubs in north and central China, but there was a lower level of integration for more remote cities in the south. Our paper presents the first comprehensive assessment of the efficiency of the Chinese silver standard, and contributes to a revaluation of market performance during pre-communist China.

Comparative European Institutions and the Little Divergence, 1385-1800. CGEH Working Paper Series

Why did the countries which first benefited from access to the New World -Castile and Portugal -d... more Why did the countries which first benefited from access to the New World -Castile and Portugal -decline relative to their followers, especially England and the Netherlands? The dominant narrative is that worse initial institutions at the time of the opening of Atlantic trade explain Iberian divergence. In this paper, we build new quantitative measures which allow for a comparison of institutional quality over time. We consider the frequency and nature of parliamentary meetings, the frequency and intensity of extraordinary taxation and coin debasement, and real interest spreads for public debt. We find no evidence that the political institutions of Iberia were worse at least until the English Civil War.

From convergence to divergence: Portuguese economic growth, 1527-1850

Journal of Economic History, 2019

We construct the first time-series for Portugal’s per capita GDP for 1527–1850, drawing on a new ... more We construct the first time-series for Portugal’s per capita GDP for 1527–1850, drawing on a new database. Starting in the early 1630s there was a highly persistent upward trend which accelerated after 1710 and peaked 40 years later. At that point, per capita income was high by European standards, though behind the most advanced Western European economies. But as the second half of the eighteenth century unfolded, a phase of economic decline was initiated. This continued into the nineteenth century, and by 1850 per capita incomes were not different from what they had been in the early 1530s.

Reconstruction of money supply over the long-run: the case of England, 1270-1870

Economic History Review, 2018

This article provides a time series of coin and money supply estimates for six hundred years of E... more This article provides a time series of coin and money supply estimates for six hundred years of English history. Two main estimation methods are proposed. The first (the direct method) is used to measure the value of government‐provided, legal‐tender coin supply only. Two varieties of the direct method are proposed. Additionally, an indirect method is proposed which relies on a combination of information about nominal GDP with an assumption regarding the evolution of velocity in time, and which can be used to calculate coin supply and M2. Both methods rely on benchmark values known for certain years, but no particular benchmark is determinant for the results. The new methodologies set out here may serve as a blueprint for a similar reconstruction of coin and money supply series for other economies for which analogous data are available.

Danger to the old lady of Threadneedle street? the bank restriction act and the regime shift to paper money, 1797-1821

European Reivew of Economic History, 2020

The Bank Restriction Act of 1797 made legal the Bank of England's suspension of the convertibilit... more The Bank Restriction Act of 1797 made legal the Bank of England's suspension of the convertibility of its banknotes. The current historical consensus is that it was a result of the state's need to finance the war, France's remonetisation, a loss of confidence in the English country banks, and a run on the Bank of England's reserves. We argue that while these factors help us understand the timing of the Restriction period, they cannot explain its success. We deploy new long-term data which leads us to a complementary explanation: the policy succeeded thanks to the reputation of the Bank of England, achieved through a century of monetary stability.

Money and Modernization in Early Modern England

Financial History Review, 2018

Classic accounts of the English industrial revolution present a long period of stagnation followe... more Classic accounts of the English industrial revolution present a long period of stagnation followed by a fast take-off. However, recent findings of slow but steady per capita economic growth suggest that this is a historically inaccurate portrait of early modern England. This growth pattern was in part driven by specialization and structural change accompanied by an increase in market participation at both the intensive and extensive levels. These, I argue, were supported by the gradual increase in money supply made possible by the importation of precious metals from America. They enabled a substantial increase in the monetization and liquidity levels of the economy, hence decreasing transaction costs, increasing market thickness, changing the relative incentive for participating in the market and allowing agglomeration economies to arise. By making trade with Asia possible, precious metals also induced demand for new desirable goods, which in turn encouraged market participation. Finally, the increased monetization and market participation made tax collection easier. This helped the government to build up fiscal capacity and as a consequence to provide for public goods. The structural change and increased market participation that ensued paved the way for modernization.

The real effects of monetary expansions: evidence from a large-scale historical experiment

Review of Economic Studies, 2021

The discovery of massive deposits of precious metals in America during the early modern period ca... more The discovery of massive deposits of precious metals in America during the early modern period caused an exogenous monetary injection to Europe's money supply. I use this episode to identify the causal effects of money. Using a panel of six European countries, I find that monetary expansions had a material impact on real economic activity. The magnitudes are substantial and persist for a long time: an exogenous 10% increase in the production of precious metals in America measured relative to the European stock leads to a frontloaded response of output and, to a lesser extent, inflation. There was a positive humpshaped response of real GDP, with a cumulative increase up to 0.9% six to nine years later. The evidence suggests that this is because prices responded to monetary injections with considerable lags.

The Great Escape? The Contribution of the Empire to Portugal's Economic Growth, 1500-1800

European Reivew of Economic History, 2015

Newly assembled macroeconomic statistics for early modern Portugal reveal one of Europe's most vi... more Newly assembled macroeconomic statistics for early modern Portugal reveal one of Europe's most vigorous colonial traders but one of its least successful growth records. Was the empire a blessing or a drag to the economy? Using an estimated dynamic model, we conclude that intercontinental trade had a substantial and increasingly positive impact on economic growth. In the heyday of colonial expansion, eliminating the economic links to empire would have reduced Portugal's per capita income by at least a fifth. While the empire helped the domestic economy, it was not sufficient to annul the tendency of the latter toward decline in relation to Europe's advanced core, which began to set in from the seventeenth century onward, but only became definite after 1800. We conclude that the explanation for Portugal's long-term backwardness must be sought primarily in domestic conditions.

History of Economics or a Selected History of Economics

Journal of The History of Economic Thought, 2008

Word Count: 74 (abstract), 4,887 (main text), 774 (endnotes).