Fiscal bargains, political institutions, and economic performance

HAHR - Hispanic American Historical Review

Volumn 88, Issue 2, 2008, Pages 219-233

  Summerhill, William R ^a  

^a NONE

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[No Author keywords available]

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EID: 67649577097     PISSN: 00182168     EISSN: 15271900     Source Type: Journal    
DOI: 10.1215/00182168-2007-119     Document Type: Review

References (37)

1. Douglass C. North, Structure and Change in Economic History (New York: Norton, 1981), 150-53
2. and Juan Gelabert, "Castile, 1504-1808," in The Rise of the Fiscal State in Europe, c. 1200-1815, ed. Richard Bonney (Oxford: Oxford Univ. Press, 1999), in addition to the myriad secondary works cited by Irigoin and Grafe
3. Philip T. Hoffman and Kathryn Norberg, Fiscal Crises, Liberty, and Representative Government, 1450-1789 (Stanford, CA: Stanford Univ. Press, 1994), 300-302
4. Hilton Root, Fountain of Privilege: Political Foundations of Markets in Old Regime France and England (Berkeley: Univ. of California Press, 1994)
5. Mark Potter and Jean-Laurent Rosenthal, "Politics and Public Finance in France: The Estates of Burgundy, 1660-1790," Journal of Interdisciplinary History 27, no. 4 (1997): 577-612
6. On the general point see Finn E. Kydland and Edward C. Prescott, "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy 85, no. 3 (1977): 473-92
7. For an illustrative application to an absolutist setting see Hilton L. Root, "Tying the King's Hands: Credible Commitments and Royal Fiscal Policy during the Old Regime," Rationality and Society 1, no. 2 (1989): 240-58
8. On the definition of rules as institutions see North, Structure and Change in Economic History, 201-3
9. Stephan R. Epstein, Freedom and Growth: The Rise of States and Markets in Europe, 1300-1750 (London: Routledge, 2000), 28
10. DeLong and Shleifer, "Princes and Merchants," 680-82
11. David Stasavage, "Cities, Constitutions, and Sovereign Borrowing in Europe, 1274-1785," International Organization 61, no. 3 (2007): 489-525. The entire matter of state creditworthiness in the medieval and early modern eras continues to bedevil economic historians for two reasons. First, the interest rate required of the state may not indicate relative creditworthiness when sovereign borrowers are subject to credit rationing; James A. Robinson, "Debt Repudiation and Risk Premia: The North-Weingast Thesis Revisited" (Paper presented at the conference on "States and Capital Markets in Comparative Historical Perspective," UCLA Center for Economic History, 2006). Second, the data available are not interest rates at all; they are instead the published coupon rates on government loans. They thus do not take into account initial issue discounts at the time of borrowing by the respective states, and they likely significantly distort actual borrowing costs
12. Kenneth A. Schultz and Barry R. Weingast, "The Democratic Advantage: Institutional Foundations of Financial Power in International Competition," International Organization 57, no. 1 (2003): 3-42
13. For discussions of the importance of the ability to tax in the British case see Patrick K. O'Brien, "Fiscal Exceptionalism: Great Britain and Its European Rivals, from Civil War to Triumph at Trafalgar and Waterloo," in London School of Economia Economic History Working Paper no. 65/01 (2001)
14. Epstein, Freedom and Growth, 12-37
15. as well as John Brewer, The Sinews of Power: War, Money, and the English State, 1688-1783 (New York: Knopf, 1989). On the interaction of fiscal centralization and limited government in Europe more generally, see Dincecco, "Limited Government."
16. DeLong and Shleifer, "Princes and Merchants," 684
17. James Conklin, "The Theory of Sovereign Debt and Spain under Philip II," Journal of Political Economy 106, no. 3 (1998): 483-513
18. Noel D. Johnson, "Banking on the King: The Evolution of the Royal Revenue Farms in Old Regime France," Journal of Economic History 66, no. 4 (2006): 963-91
19. Estimates of such costs vary with the assumptions necessary for their calculation. For a sense of the relative magnitudes in New Spain and British North America, see Peter D. McClelland, "The Cost to America of British Imperial Policy," American Economic Review 59, no. 2 (1969): 370-81
20. and John H. Coatsworth, "Obstacles to Economic Growth in Nineteenth-Century Mexico," American Historical Review 83, no. 1 (1978): 80-100
21. Conklin, "Spain under Philip II"; Gelabert, "Castile, 1504-1808," 229
22. Douglass C. North and Barry R. Weingast, "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," Journal of Economic History 49, no. 4 (1989): 803-32
23. Barry R. Weingast, "The Political Foundations of Limited Government: Parliament and Sovereign Debt in 17th- and 18th-Century England," in The Frontiers of the New Institutional Economics, ed. John N. Drobak and John V. C. Nye. (New York: Academic Press, 1997); Robinson, "Debt Repudiation and Risk Premia."
24. For important critiques, modifications, and advances to the North and Weingast thesis on the British case see O'Brien, "Fiscal Exceptionalism"; Epstein, Freedom and Growth
25. and David Stasavage, Public Debt and the Birth of the Democratic State: France and Great Britain, 1688-1789 (Cambridge: Cambridge Univ. Press, 2003)
26. Nathan Sussman and Yishay Yafeh, "Institutional Reforms, Financial Development, and Sovereign Debt: Britain, 1690-1780," Journal of Economic History 66, no. 4 (2006): 906-35; Robinson, "Debt Repudiation and Risk Premia."
27. Stasavage, "Cities, Constitutions, and Sovereign Borrowing," 509-12
28. Jack P. Greene, "Legislative Turnover in British America, 1696 to 1775: A Quantitative Analysis," William and Mary Quarterly 38, no. 3 (1981): 442-63
29. Jack Rakove, Andy Rutten, and Barry R. Weingast, "Ideas, Interests, and Credible Commitments in the American Revolution" (ms., Stanford University, 2000)
30. For differing views on this point see Stanley Engerman and Kenneth Sokoloff, "Factor Endowments, Inequality, and Paths of Development among New World Economies," Economia 3, no. 1 (2002): 41-109
31. Douglass C. North, William R. Summerhill, and Barry R. Weingast, "Order, Disorder, and Economic Change: Latin America vs. North America," in Governing for Prosperity, ed. Bruce Bueno de Mesquita and Hilton L. Root (New Haven: Yale Univ. Press, 2000)
32. For a succinct theoretical examination of bargaining models see Martin J. Osborne and Ariel Rubinstein, Bargaining and Markets (San Diego: Academic Press, 1990)
33. Jean-Laurent Rosenthal, "The Political Economy of Absolutism Reconsidered," in Analytic Narratives, ed. Robert Bates et al. (Princeton, NJ: Princeton Univ. Press, 1998)
34. On Spain, see Mauricio Drelichman, "All That Glitters: Precious Metals, Rent Seeking and the Decline of Spain," European Review of Economic History 9 (2005): 313-36
35. A couple of prominent examples include Niall Ferguson, ed., Virtual History: Alternatives and Counterfactuals (London: Papermac, 1998)
36. Philip E. Tetlock, Richard Ned Lebow, and Geoffrey Parker, eds., Unmaking the West: "What-If" Scenarios That Rewrite World History (Ann Arbor: Univ. of Michigan Press, 2006)
37. Thompson, "Castile," 195-96