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Comparative European institutions and the Little Divergence, 1385-1800

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  • Henriques, Antonio

    (Universidade do Porto)

  • Palma, Nuno

    (University of Manchester; Instituto de Ciencias Sociais, Universidade de Lisboa; CEPR)

Abstract

Why did the countries that first benefited from access to the New World – Castile and Portugal – decline relative to their followers, especially England and the Netherlands? The dominant narrative is that worse initial institutions at the time of the opening of the Atlantic trade explain the Iberian divergence. In this paper, we build a new dataset which allows for a comparison of institutional quality over time. We consider the frequency and nature of parliamentary meetings, the frequency and intensity of extraordinary taxation and coin debasement, and real interest rates and spreads for public debt. We find no evidence that the political institutions of Portugal and Spain were worse until the English Civil War.

Suggested Citation

  • Henriques, Antonio & Palma, Nuno, 2021. "Comparative European institutions and the Little Divergence, 1385-1800," CAGE Online Working Paper Series 583, Competitive Advantage in the Global Economy (CAGE).
    • Handle: RePEc:cge:wacage:583
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    Cited by:

    1. Geloso, Vincent J. & Salter, Alexander W., 2020. "State capacity and economic development: Causal mechanism or correlative filter?," Journal of Economic Behavior & Organization, Elsevier, vol. 170(C), pages 372-385.
    2. Kedrosky, Davis & Palma, Nuno, 2021. "The Cross of Gold: Brazilian Treasure and the Decline of Portugal," CAGE Online Working Paper Series 574, Competitive Advantage in the Global Economy (CAGE).
    3. Leticia Arroyo Abad & Nuno Palma, 2020. "The Fruits of El Dorado: The Global Impact of American Precious Metals," Working Papers 0179, European Historical Economics Society (EHES).
    4. De Magalhaes, Leandro & Giovannoni, Francesco, 2022. "War and the rise of parliaments," European Economic Review, Elsevier, vol. 148(C).
    5. Ernesto Dal Bó & Karolina Hutková & Lukas Leucht & Noam Yuchtman, 2022. "Dissecting the Sinews of Power: International Trade and the Rise of Britain’s Fiscal-Military State, 1689-1823," NBER Working Papers 30754, National Bureau of Economic Research, Inc.
    6. Palma, Nuno, 2019. "Patterns of Iberian economic growth in the early modern period," IFCS - Working Papers in Economic History.WH 29185, Universidad Carlos III de Madrid. Instituto Figuerola.
    7. Prados de la Escosura, Leandro & Rodriguez-Caballero, Carlos Vladimir, 2020. "Growth, War, and Pandemics: Europe in the Very Long-run," CEPR Discussion Papers 14816, C.E.P.R. Discussion Papers.
    8. Charotti, Carlos Javier & Palma, Nuno & dos Santos, Joao Pereira, 2022. "American treasure and the decline of Spain," CEPR Discussion Papers 17020, C.E.P.R. Discussion Papers.
    9. Adam Brzezinski & Roberto Bonfatti & K. KıvançKaraman & Nuno Palma, 2020. "Monetary Capacity," Economics Series Working Papers 926, University of Oxford, Department of Economics.
    10. Federico, Giovanni & Bisin, Alberto, 2021. "Merger or acquisition? An introduction to the Handbook of Historical economics," CEPR Discussion Papers 15795, C.E.P.R. Discussion Papers.
    11. Nuno Palma, 2019. "American Precious Metals and their Consequences for Early Modern Europe," Working Papers 0174, European Historical Economics Society (EHES).
    12. Palma, Nuno & Reis, Jaime & Rodrigues, Lisbeth, 2023. "Historical gender discrimination does not explain comparative Western European development: evidence from Portugal, 1300-1900," Explorations in Economic History, Elsevier, vol. 88(C).
    13. David de la Croix & Pauline Morault, 2020. "Winners and Losers from the Protestant Reformation: An Analysis of the Network of European Universities," LIDAM Discussion Papers IRES 2020029, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    14. Leonor Freire Costa & António Henriques & Nuno Palma, 2022. "Anatomy of a Premodern State," Economics Discussion Paper Series 2208, Economics, The University of Manchester.
    15. Arteaga, Fernando & Desierto, Desiree & Koyama, Mark, 2024. "Shipwrecked by rents," Journal of Development Economics, Elsevier, vol. 168(C).
    16. Prados de la Escosura, Leandro & Rodríguez-Caballero, C. Vladimir, 2022. "War, pandemics, and modern economic growth in Europe," Explorations in Economic History, Elsevier, vol. 86(C).
    17. Patrick K. O'Brien & Nuno Palma, 2023. "Not an ordinary bank but a great engine of state: The Bank of England and the British economy, 1694–1844," Economic History Review, Economic History Society, vol. 76(1), pages 305-329, February.
    18. Leonor Freire Costa & Susana Münch Miranda, 2023. "Reputational recovery under political instability: Public debt in Portugal, 1641–83," Economic History Review, Economic History Society, vol. 76(3), pages 871-891, August.
    19. Yao Chen & Nuno Palma & Felix Ward, 2022. "Goldilocks: American precious metals and the Rise of the West," Tinbergen Institute Discussion Papers 22-063/VI, Tinbergen Institute, revised 01 Jul 2024.
    20. Dal Bo, Ernesto & Hutkova, Karolina & Leucht, Lukas & Yuchtman, Noam Meir, 2023. "Dissecting the sinews of power: international trade and the rise of Britain's fiscal-military state, 1689-1823," LSE Research Online Documents on Economics 121310, London School of Economics and Political Science, LSE Library.
    21. Peter Grajzl & Peter Murrell, 2024. "From Status to Contract? A Macrohistory from Early-Modern English Caselaw and Print Culture," CESifo Working Paper Series 11246, CESifo.
    22. Anthony Edo & Jacques Melitz, 2024. "The Controversy over European Inflation in 1500–1700: Precious Metals or Population? The English Evidence," Open Economies Review, Springer, vol. 35(3), pages 659-685, July.

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    More about this item

    Keywords

    Atlantic Traders; New Institutional Economics; the Little Divergence JEL Classification: N13; N23; O10; P14; P16;
    All these keywords.

    JEL classification:

    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • P14 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Property Rights
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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