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

Published online by Cambridge University Press:  01 December 2010

Mauricio Drelichman  and
Hans-Joachim Voth
Mauricio Drelichman*
Affiliation:
Assistant Professor, Department of Economics, The University of British Columbia, 997-1873 East Mall, Vancouver, BC V6T 1Z1 Canada; and CIFAR. E-mail: drelichm@interchange.ubc.ca.
Hans-Joachim Voth*
Affiliation:
ICREA Research Professor, Department of Economics Universitat Pompeu Fabra, Ramon Trias Fargas 25-27, 08005 Barcelona; and CREI.
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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-to-revenue ratios remained broadly unchanged during 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.

Type
ARTICLES
Information
The Journal of Economic History , Volume 70 , Issue 4 , December 2010 , pp. 813 - 842
Copyright
Copyright © The Economic History Association 2010

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