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The Sustainable Debts of Philip II: A Reconstruction of Castile's Fiscal Position, 1566-1596

Mauricio Drelichman and Hans-Joachim Voth

Economics working papers from Vancouver School of Economics

Abstract: The defaults of Philip II have attained mythical status as the origin of sovereign debt crises. We reassess the fiscal position of Habsburg Castile, deriving comprehensive estimates of revenue, debt, and expenditure from new archival data. The king’s debts were sustainable. Primary surpluses were large and rising. Debt/revenue ratios were broadly unchanged across Philip’s reign. Castilian finances in the sixteenth century compare favorably with those of other early modern fiscal states at the height of their imperial ambitions, including Britain. The defaults of Philip II therefore reflected short-term liquidity crises, and were not a sign of unsustainable debts.

Keywords: debt sustainability; serial defaults; early modern state finances (search for similar items in EconPapers)
JEL-codes: H62 H63 F34 N24 N44 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2007-11-06, Revised 2010-04-08
New Economics Papers: this item is included in nep-his
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Working Paper: The sustainable debts of Philip II: A reconstruction of Castile's fiscal position, 1566-1596 (2009) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ubc:bricol:drelichman-07-11-06-09-33-37

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