Reloading the Price Revolution in Seville: Four Stages of High Inflation with Different Causes

Abstract

New estimates about the evolution of prices in Seville during the sixteenth century challenge the conclusions of Hamilton’s American Treasure and the Price Revolution in Spain, 1501–1650. While Hamilton’s calculations suggest that prices increased by a factor of 3.7 between 1514 and 1603, new estimates indicate that prices increased by a factor of 7.1. Both price curves begin to separate in 1547 and can be largely explained by the behaviour of house rental prices, which Hamilton did not take into consideration. In the first part of the article, I examine the characteristics of the new Consumer Price Index, outline the chronological limits of the “price revolution” and identify the periods in which inflation was greatest, namely 1515–1526, 1540–1560, 1575–1587 and 1598–1602. Afterwards, I calculate which products of the basket of goods are the causes of inflation for each of the periods outlined above and show a relation of the factors that may be regarded as causing the inflationist processes. These factors include agrarian crises, population growth, increase in money supply, the division of labour and growth in urbanisation, the relationship between supply and demand in the house rental market, changes in the income velocity of money, the coinage debasement and the effect of taxes. My premise is that each of the aforementioned inflationist episodes responded to a different combination of factors