Economics of Westeros II

Part 2: Proposals to the Crown

By K.w. Dent

In part 1 of this essay series, I used Keynesian economics to define the major economic problems facing Westeros. The major issues characterized in part 1 were the lack of a central liquidity vendor, major debts, ineffective demand cycles, inefficient population distribution, and instability in the Riverlands. In part 2, I will make proposals to address these problems. 

 I will suggest the effects of these proposals to the Westerosi economy through the methodology of the 3 equations model, which is a modern expansion on Keynesian thinking that will more accurately reflect why and how these proposals will be beneficial to the Westerosi economy. So, what is the 3-equations model?

The 3-Equations Model

The 3-equations model is an increasingly popular take on new-age Keynesian Macroeconomics that combines an IS-LM Curve, a Phillips curve, and an interest rate based monetary policy rule

In brevity, it represents the relationship between national savings, investments, demand for loans, available money, inflation, and interest rates.

The IS-LM model is a tool which shows the relationship between available “investments and savings” (IS) and “liquidity preference and money supply” (LM). As can be seen on the below graph, the downward sloping IS curve represents the points at each and every equilibria where available investments meet available savings.

ISLM Curve (Figure 3)

The LM Function represents liquidity preference (or, demand of money) and money supply at all equilibriums. 

Combining the IS curve and the LM curve gives us the equilibrium for available funds to be lent at specific interest rate points relative to any output level. For Westeros, defining a method to create a market for available investment will be pivotal to creating economic growth into the future. 

The Phillips Curve is a model that was developed by William Phillips which describes an inverse relationship between rates of unemployment and corresponding rates of rises in wages that result within a given economy. 

Samuelson and Solow later used the Phillips Curve to define a connection between increased employment rates with increased short-run inflation. This connection was later corroborated by famous economist Milton Friedman. In short, when inflation is high, unemployment is low and vice versa. You can see the curve for this below. For Westeros, this relationship will be important as we attempt employing a higher percentage of available labor. 

Phillips Curve (Figure 4)

For the monetary policy rule, the central bank (more on that later) will choose a desired output and inflation level. Many of the proposals in this essay will be centered around employing a higher level of the labor force, which will result in natural inflation per the Phillips Curve. It is important that our growth takes place over a proper period of time as to avoid runaway inflation. 

Monetary Policy Rule (Figure 5)


Now that we’ve laid down the groundwork for the methodology, let’s move onto the actual proposals.

The Central Bank of Westeros

“We need our own bank, Cersei decided, the Golden Bank of Lannisport. Perhaps when Tommen’s throne was secure, she could make that happen” (Cersei VIII AFFC). 

It feels very strange to be quoting Cersei Lannister with regards to economic proposals, but as she muses in AFFC, Westeros does need a Central Bank. So my first proposal is for the creation of the Central Bank of Westeros (CBW). 

The CBW will be a treasury located at Harrenhal, operated by 9 dignitaries. One from Dorne, the Reach, the Stormlands, the Riverlands, the Westerlands, the Iron Islands, the Vale, and the North. The crownlands will be represented by the Master of Coin, who will serve as the major intermediary between the crown and the Central Bank. Together, the 9 lead members of the Central Bank will vote on proposals as well as oversee the daily operations of the treasury.

All 9 dignitaries will bring 200 men from their respective regions. 100 men will serve as a permanent garrison to protect the treasury. The other 100 will serve as operators to protect gold transfers and general operations within the region. Dignitaries will serve a period of no longer than 5 years. Harrenhal will forgo all of its lands and incomes to Riverrun, save all immediate lands required to sustain the Castle.

The creation of the CBW also creates a market for loanable funds for the realm. In short, a central lender allows for us to affect the economy of the realm using the methodology of the 3 equation model through new access to funds. 

The Importance of the Geographic location of Harrenhal

The Riverlands by Scafloc

Harrenhal serves as an advantageous location for the Central Bank of Westeros due to it central location, strong ability to garrison, and general proximity to the Riverlands. 

Harrenhal is very centrally located on the continent of Westeros. Due to this, allocating funds throughout the realm will be most efficient and equitable to all parties from this point. 

Harrenahl, by Lino Dreighe

Harrenhal was built by Harren the Black as a monument to himself. He intended it to be the greatest castle in the Seven Kingdoms The construction of the behemoth stronghold spanned 40 years. To this day, it is the largest castle in the Seven Kingdoms. Properly provisioned and garrisoned, Harrenhal could withstand a siege of epic length (so long as the foe doesn’t have dragons). Due to this, Harrenhal is a very safe location for the Central Bank to reside.

Harrenhals proximity to the Riverlands also provides a solution to another problem that has always plagued the economic growth of Westeros.

Inefficient Use of the Riverlands as a Trading Alley.

Due to its central location, the Riverlands have been caught in the crossfires of most major military conflicts throughout Westerosi history. This has resulted in general instability within the region that detracts from its potential economic usage as a major trading alley.

The Riverlands is the most centrally located region of the Seven Kingdoms, sharing a boundary with every other kingdom except Dorne. The region additionally contains waterways that connect with major portions of the rest of the Westeros. The Green Fork runs from The Neck to the headwaters of the Trident where it connects with the Blue Fork and the Red Fork, which run from the western portions of the region. They spill out into the Narrow Sea at Salt Pans. From the God’s Eye, one can book passage from Harrenhal all the way to King’s Landing via the Blackwater Rush. In addition to the vast waterways connecting the region, the largest road in the Kingdom (the Kings Road) runs directly through the region.  

Establishing the Central Bank of Westeros at Harrenhal will create a permanently garrisoned outpost that will help provide stability to the region. Stability within the region will encourage trading through the Riverlands, fostering greater economic connections between kingdoms that require traverse through the Riverlands.

Why Not Establish the Central Bank in Kings Landing?

Throughout the series of A Song of Ice and Fire, we see multiple issues occur with the current fiduciary system of Westeros. The Master of Coin is essentially the singular financial power in Kings Landing. The King and his council give orders to the Master of Coin, but the Master of Coin has bilateral control over the finances of the realm (where they borrow from, at what rates, how those funds are allocated, etc.). 

This can be extremely problematic if a person with ill-intent rises to this post. As it happens, at the beginning of A Game of Thrones, Petyr Baelish is Master of Coin. As covered in part 1 of this essay series, Petyr Baelish accepts predatory loans from the Iron Bank of Braavos that results in crippling debt and financial instability to the realm. 

Past having to look out for the Littlefingers of the world, the Central Bank being located in the capital city creates a conflict of interest with the crown, which already maintains an incredible amount of power. The Crown will maintain its own treasury, but the Central Banks purpose is to create liquidity for the rest of the realm, not operate as the crowns personal available funds pocket.

Pulling the Central Bank out of the capital organizes it as an organization that operates for the realm under the governing jurisdiction of the realm. 

One may argue that a Central Bank centralizes too much fiscal power in a single organization. However, a Central Bank would actually decentralize the current locust of fiscal power in two major ways:

  1. Currently the crown operates as a pseudo-Central bank, operated solely by whoever the current Master of Coin is. This essentially puts a single self-interested person in control of all financial loans and all of the crowns finances. Additionally, it intertwines the power of the crown with the availability of the treasury. A Central Bank pulls that power out of the crown and puts into a single minded organization interested only in the return of capital.
  2. By appointing dignitaries from each region, the fiscal responsibility of the realm is born by all members, represented in a fiscal governing body reflective of each region. 

As the Central Bank grows, separate divisions of the institution will be installed at the major ports of Kings Landing, Old Town, Lannisport, White Harbor, and Sunspear to reduce travel times and increase accessibility. 

Central Bank of Westeros’ Effect on the 3 equations model

The Central Bank of Westeros essentially creates the existence of a fiscal model that can reflect the economy of Westeros. A Central Bank that is accessible to all citizens (or as many as possible) creates a certain availability of loanable funds. An availability of funds will allow members of the Central Bank to determine the rate at which they can loan out those funds to prospective lendees. 

ISLM Curve (Figure 3)


The point at which available funds meets desired investment will determine the interest rate at which the Central Bank will pay dividends and lend loans. 

Central Bank Deduction

All citizens who are subject to taxation either from their respective lord’s or directly from the crown are eligible to deduct up to 15% of their total taxable bill through depositing the amount they claim in deduction in the Central Bank. 

This measure will help fill the coffers of the Central Bank and provide yearly incentive for people to continue making deposits. 

Effect of Stability in the Riverlands

The Riverlands has not performed economically to its potential for most of its history. As has been covered, this is largely due to the region consistently being directly in the line of military encounters. 

Creating the Riverlands as a trading avenue will help influence economic stimulus, as a stable Riverlands will create conditions more suitable and attractive to trade. As trade increases, total output (Y) will increase. Referencing Figure 3 above, at a higher level of trade we will have a new equilibrium at a higher level of both demand and supply for loanable funds at a lower (more affordable) interest rate.

Due to increased revenue as a result of increased trade, business owners will have more liquidity to spend on investment (almost acting like a tax credit, in this example). This results in an IS shift, which is an increase in total level of investment and a rising interest rate.

Rising interest rates due to increased demand of investment funds becomes more attractive to ‘savers’ (or, supplier of loanable funds).

In summation, stability in the Riverlands will affect the Westerosi economy in many ways. Increased trade due to a stable trading alley will increase total output and GDP. At a higher output level, interest rates will fall and business owners will seek investment opportunities. As business owners seek demand for loanable funds, interest rates will rise to meet an equilibrium point at which savers are willing to loan.

Bond of Westeros

The Central Bank of Westeros will offer a 1 year and 5 year bond with an interest rate determined by the market. This will give the CBW a tool to control the money supply and raise capital when needed.

The Bond of Westeros will allow the government to have some control of the money supply. Additionally, the Bond of Westeros will provide a tool for the government to raise capital when needed.

The Northern Relocation Stipend

In the first part of this essay, I noted how population is ineffectively distributed throughout Westeros. Specifically, the population gap between the Reach and the North is incredibly inefficient. In order to combat this, the Central Bank of Westeros will provide a relocation stipend of 1 Golden Dragon per year for those who move to Northern lands. 

In our world, the United States offers a dividend to citizens of Alaska (currently in 2019, it’s about a $2,000 annual dividend) called the Alaska Permanent Fund. It was established in 1982 as a way of not only enticing people to stay but also to help combat high prices on ‘imported’ goods. I could go on about the APF for far too long, but the point is it’s an example of a citizen dividend that really works.

Northern lords will be given tax breaks for levels of new citizens they allow to settle on their land. This will lead to an increase in wealth for Northern lords whose lands now become more productive. 

Effect on the ISLM

The Northern Relocation Stipend (NRS) will provide a natural stream of both human capital and currency into a portion of the realm that is economically stagnant.

Those who relocate will become apart of the Northern labor force. An increase in

the Northern labor force will allow the North to better utilize and access resources that are currently sitting as inventory due to a workforce that is not large enough to access it’s full potential. 

Additionally, those who relocate will earn one golden dragon per year as a stipend for relocation. This flow of capital will contribute to a multiplier effect on the economy, as relocated citizens will have liquid capital to spend within the northern economy. 

A flow of liquid capital into the northern economy will benefit all northerners. Business owners will have more willing and able consumers who can pay for goods due to increased demand. As businesses begin to grow, they will naturally require more employees who will then benefit from their own employment from a wage. The wages employees earn then gets funneled back into the economy once more for others to benefit from.

As can be seen, this is the multiplier effect at work. One golden dragon given to a single person breeds into an entire clutch of eggs, multiplying and creating more dragons.

This line of thinking is actually brought up by Petyr Baelish in the book series. However, Baelish has created another problem which needs to be addressed moving forward.

Negotiating New Terms With The Iron Bank

In ASOS, it is stated that the “crowns incomes are ten times higher than they were under Aerys.” Despite this, it is additionally indicated that this sum barely covers the usury on their loans. The vast majority of the loans come from the Faith, the Lannisters, and the Iron Bank. 

Considering the Faith and Lannister’s have specifically vested interest in the continued financial success of the crown, it’s relatively safe to say that it is the terms with the Iron Bank that are the more ‘dangerous debt’. 

In order to combat this issue, the crown will negotiate new terms with the Iron Bank. This may pose as a difficult measure, however, there are massive benefits that the Iron Bank may find appealing in a more economically stable Westeros.

Why it would be in the Iron Banks best interest to renegotiate.

Held to the current terms, Westeros will default on it’s loan. The Iron Bank could support another claimant and work to install a new ruler as recompense. However, wars are exceedingly costly and overthrowing the current government still wouldn’t guarantee that the Iron Bank gets its due.

Negotiating a better loan agreement (that isn’t being agreed upon by a Master of Coin who is purposefully accepting predatory loans) will actually result in a higher likelihood that the Iron Bank receives additional pay installments. Better terms for Westeros aren’t only beneficial for this specific loan, it’s also healthier for the Iron Bank in the Long Run.

In 2005, the International Monetary Fund conducted a study of more than 100 countries and four decades of data to determine the rate at which countries trading partners influence domestic growth. Even after adjusting for regional trends the study concluded the following;

“Trading partners relative income levels are positively correlated with growth, suggesting that the richer a country’s trading partners, the stronger is conditional convergence. A general implication of the results is that countries benefit from fast-growing and relatively more developed countries” (Arora, Vamvakidis).

Establishing Westeros as a booming economy and trading partner would have positive implications on Braavos’ ability to continue growing their domestic economy. For Braavos specifically, the North is a relatively pivotal trading partner. Adam Whitehead writes as much in his An Economic Map of Westeros project where he states, “A key export [of the North] is the (relatively) nearby Free City of Braavos, which hungers for wood to maintain its mighty fleet.” The North being more productive would have a direct economic effect on Braavos in the form of a higher supply of lumber being shipped from the North. At a higher supply, the price of timber would fall and Braavos could bolster its fleet at a lower cost. An increase in the size of the fleet would allow for a higher volume of trade. Additionally, a growing Westerosi economy provides more lucrative markets for a now larger Braavosi fleet to trade in. The end state of which is a larger volume of wealth and goods being funneled back into Braavos at a more optimal real price point. 

As economies grow around Planetos, so does the demand for loanable funds and thus the Iron Bank grows it’s clientele due to real economic growth around Planetos. 

As can be seen, It is thus by far in their best interest to foster economic growth in Westeros while still collecting on reasonable loans. 

Conclusion of solutions

Westeros has many opportunities for economic growth. The establishment of a central lender would help provide funds to growing business’ in the realm. The establishment of the central bank in the Riverlands would bring stability to a region that has been historically unstable. As the Riverlands becomes a stable region, it will become the major trading alley of the realm, fostering economic transaction between the different regions of Westeros. 

The relocation of willing citizens to the North will unlock resources currently sitting in inventory, as well as foster economic growth within a financially stagnant Northern region. Additionally, the increase in productivity in the North will provide incentive for renegotiating loan terms with the Iron Bank of Braavos.

Healthier and stable relations with the Iron Bank will benefit the growth of the Westerosi economy. As it grows, Westeros will become an international power house in trade that will bring prosperity to the whole of the realm.




Arora, Vivek, and Athanasois Vamvakidis. “How Much Do Trading Partners Matter for

Economic Growth.” JSTOR, International Monetary Fund, 2005,

1.) García, Elio M., and Linda Antonsson. “The Citadel.” The Citadel: So Spake Martin – Targaryen Kings, 2005,

2.) Hibberd, James. “George R.R. Martin on Why Joffrey Died THAT Way.”,, 2014,

3.) Martin, George R. R. A Clash of Kings. New York :Bantam Books, 19992012. Print.

4.) Martin, G. R. R. (2011). A dance with dragons. New York: Bantam Books.

5.) Martin, George R. R. A Feast for Crows. New York :Bantam Books, 2011. Print.

6.) Martin, George R. R. A Game Of Thrones: Book One Of A Song Of Ice And Fire. New York : Bantam Books, 2011, c1996. Print.

  • 7.) Martin, G. R. R. (2000). A Storm of Swords. New York, NY: Bantam Books.

8.) Whitehead, Adam. “An Economic Map of the Seven Kingdoms.” Atlas of Ice and Fire, 3 May 2018,



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6 responses to “Economics of Westeros II

  1. I’m new around here and i am finding all of the posts i have read so far excellent.

    While your sets of proposals would greatly improve the general economic landscape of Westeros, a lot of this greatly hinges on the stability of the Riverlands.

    Like you correctly noted in the part 1 of this analysis, despite the great potential of the Riverlands it has reach its potential. How then do you propose that the crown could make the Riverlands and Westeros at large politically stable

    • Excellent question certainly! Stability is obviously a major challenge all across this world (hell, it’s a major struggle in our world). I think establishing a permanently held bi-regional garrison at Harrenhal could be a major step towards fostering stability. Harrenhal is in the dead center of the realm, and having garrisoned forced from multiple regions should help ensure they don’t side with any specific side in any future military conflicts. Furthermore, the head office of each region is proposed to change every 5 years (which should help ward off people abusing power through entrenchment in a position). Past that, I think you continue to create conditions that incentivize people to foster stability through sharing that growing commerce with each region. If the economic conditions around the realm continue to prosper, each region should be incentivized to help in ‘keeping the peace’.

      Sorry for the late response! I just saw your reply here today.


    • (Sorry, I just saw this question, so apologies for the late response).

      Great question! My opinion is that stability as a societal function is met when those involved in that society all have a vested interest in that continuation of that stability. Due to this, I believe you need to instill systemic changes that ‘better foster’ stability. So, having a central bank that increases liquidity, access to capital, and return on money (interest rate) actually provides incentive for all parties to ‘uphold stability’

      Economists like to show these kind of relationships mathematically, which we can do here as well;

      If Stability is a function of ‘the vested interests of those involved’ we can write the equation like this:
      S(fx) = A(x)+B(x)+I(x)
      This is “Stability” as a utility rate of increased liquidity A(x) + a utility rate of access to capital + a utility rate of return on money (or interest rates) I(x) BEFORE the creation of a central bank.

      AFTER the creation of a central bank, we derive the equation as S(fx)^1 = A(x)^1+B(x)^1+I(x)^1

      We know that the creation of a central bank has a net positive affect on our variable so;

      S(fx)^1 = A(x)^1+B(x)^1+I(x)^1 > S(fx) = A(x)+B(x)+I(x) ;

      S(fx)^1 > S(fx)

      In this set of relationships, you get a higher level of natural stability (if your model correctly assumes people behaving in a way that derives them the greatest utility. Which is, honestly, the issue economics always faces. Because people so often DO NOT behave this way. But it does make the math work).

      Past this, the creation of a central bank at Harrenhal provides a major ‘military like’ outpost that can help to defend the Riverlands (if say, Tywin Lannister starts attacking it with impunity).

      Additionally, I think the solution is to continue adopting policy proposals that install systems similar to the methodology I outlined above. You need to continue providing all of your citizens with reasons to desire stable politics. Once you break a contract where stability is already not being uphold, thats where you can get very unstable politik.

  2. Callidus

    I very much liked your economic analysis and suggestions regarding Westeros. In general your proposals seem reasonable to me. There is only one problem I can think of. It consists within the NRS. In Westeros, due to it´s feudal system, serfdom still exists(I think; correct me if I´m wrong) and therefore I don´t see a realistic way to get the NRS to work properly. So I´d like to know how you would approach this difficulty. Thanks for thr great work and greetings from Germany!

    • Thank you! I really appreciate the feedback and the question. It’s a great point regarding the difficulty that feudalism presents to the ‘Economy of Westeros’. However, there is still commerce that exists (we know lumber and mining are both relatively big exports and industries in the North). The idea would be to funnel the stipend (collected on a given date each year) through the White Harbor and then sent it to more local and major hubs. The influx of availability of funds is purely intended to increase commerce from those who receive it. Perhaps, for instance, a receiver of the NRS purchases lumber equipment and hires a few men to begin their own ‘Lumber Business’. Lords would then be incentivized to allow their lands to be cultivated through %sales of that Lumber. In this scenario, the ‘Lumber Business’ is richer, the Lord whose land is ‘Lumbered’ is richer, and the North produces for ‘Lumber’, increasing its GDP through accessing capital that was stuck in inventory due to the previous lack of the human capital that is now available due to the new Lumber Business. There are certainly more issues you can poke at in this case, but that’s the top-level view of the intention of the suggestion. Thank you so much for the question!

      • TdF

        This answer certainly approaches the financial aspect of the NRS, but not the feodal aspect. Labor force is almost equal to military might in Westeros. Even if united under a strong king who stands above the competing “provinces”of Westeros, i doubt the Lords will accept the Crown offering men (of fighting age) dragons to reduce their own military and economic power and improving that of the North.

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