 Fiscal capacity and the risk of sovereign debt after the Glorious Revolution: A reinterpretation of the North–Weingast hypothesisEuropean Journal of Political Economy, 2015, vol. 38, issue C, 71-81 Abstract: Several explanations have been given to account for the fact that, in contrast to the claim made by North and Weingast (1989), the decline in interest rates on British sovereign debt did not occur until several years after the Glorious Revolution in 1688. This paper puts forward the hypothesis that the decline in the risk premium on Britain's sovereign debt was due to the significant increase in excise duties in the early part of the eighteenth century. This increase was possible for two reasons. On the one hand, with the Glorious Revolution, parliament no longer had reason to fear that the King would strengthen his political power due to the availability of more fiscal revenue. On the other hand, the new excise taxes were borne mostly by the poor, that is a social class not represented in parliament. The delay in reducing the interest rate on British sovereign debt, following the Glorious Revolution, was, therefore, due to the length of time needed to increase and improve the fiscal bureaucracy responsible for the collection of excise duties. Keywords: Glorious Revolution; Fiscal capacity; Sovereign debt; Interest rates (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:38:y:2015:i:c:p:71-81 DOI: 10.1016/j.ejpoleco.2014.12.002 Access Statistics for this article European Journal of Political Economy is currently edited by J. De Haan, A. L. Hillman and H. W. Ursprung More articles in European Journal of Political Economy from Elsevier |
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