Debt policy in Spanish America during the seventeenth century

Abstract

This paper analyzes the policies that the Castile of the seventeenth century followed toward creating and selling short-term and long-term debt paid off from the Crown's New World revenues. We use microdata to reconstruct comprehensive fiscal accounts for Spanish America during the seventeenth century. Our new time series evidence shows that the Spanish Empire maintained differential debt policies in the center and the periphery. Spanish America issued considerably less debt, more credible than coetaneous Castilian debt. However, the issuances’ size did not reflect lower debt capacity in the New World, as the Spanish Empire restrained long-term debt issuance to emergencies. We also provide complementary evidence from debt issuances and explain why differential debt policies were maintained.