DEBT SUSTAINABILITY IN HISTORICAL PERSPECTIVE: THE ROLE OF FISCAL REPRESSION | Zendy

Drelichman Mauricio | Zendy; Voth HansJoachim | Zendy

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DEBT SUSTAINABILITY IN HISTORICAL PERSPECTIVE: THE ROLE OF FISCAL REPRESSION

Author(s) -

Drelichman Mauricio,

Voth HansJoachim

Publication year - 2008

Publication title -

journal of the european economic association

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 7.792

H-Index - 93

eISSN - 1542-4774

pISSN - 1542-4766

DOI - 10.1162/jeea.2008.6.2-3.657

Subject(s) - hegemony , fiscal sustainability , debt , financial repression , economics , fiscal policy , perspective (graphical) , sustainability , macroeconomics , economy , monetary economics , interest rate , political science , ecology , artificial intelligence , politics , biology , computer science , law

This article examines the debt history of two contenders for European hegemony: 16th‐century Spain and 18th‐century Britain. We analyze their fiscal behavior using measures of overborrowing and fiscal policy functions. Our results suggest that stringency was not key for Britain's success in avoiding default. Instead, fiscal repression allowed the United Kingdom to borrow at below‐market rates, thereby outspending its continental rivals. (JEL: E4, F41, N23)

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