Was Economic Growth Likely in Lower Canada?

Abstract

Generally, the historical literature presents the period from 1817 to 1851 in Lower Canada (the modern-day province of Quebec) as one of negative economic growth. In this paper, we question this narrative by pointing to the rise of free banking during the period, which supports a case for increases in per capita income. Using the equation of exchange, we propose that given the increase in the stock of money and the reduction in the general price level, the case for a fall in per capita income is tenuous. We present complementary evidence suggesting that growth was positive.