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Military expenditure, spending capacity and budget constraint in Eighteenth-Century Spain and Britain

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2009
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Centro de Estudios Políticos y Constitucionales, Universidad Carlos III
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Using new public spending statistics for Spain and other various indicators we show that Spain and Britain suffered larger increases in public expenditure in the periods in which they fought each other and other countries.The British Exchequer spent much more than its Spanish counterpart,especially on the Army and Navy and debt repayment. This situation helps to explain why Britain emerged victorious against Spain in the majority of these wars and was a consequence of the political and institutional changes made in England from 1688 onwards, reducing budget constraint and allowing Britain to mobilise the necessary resources to become the leading world power. In Spain, however, the changes required to eliminate the country’s history of bankruptcies and increase its spending capacity were not made.
Utilizando unas nuevas series del gasto de la Hacienda española y algunos otros indicadores se comprueba que España y Gran Bretaña sufrieron grandes aumentos del gasto público en aquellos periodos en que guerrearon entre sí y con otros países. El Estado británico gastó mucho más dinero que el español, sobre todo en los capítulos militares y el servicio de la Deuda, lo que contribuye a explicar por qué Gran Bretaña venció a España en la mayoría de los conflictos que libraron ambos países. Esto era, en buena parte, una consecuencia de los cambios políticos e institucionales llevados a cabo en Inglaterra a fines del siglo XVII, que limitaron las restricciones presupuestarias y facilitaron que Gran Bretaña llegara a ser la primera potencia mundial, mientras que en España no se hicieron las transformaciones necesarias para hacer olvidar su larga tradición de bancarrotas y aumentar su capacidad de gasto.
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Received 03/18/2008. Accepted 09/23/2008. The author is grateful to the Universidad Complutense of Madrid for funding part of this research (grant no PR3/04-12466). I would like to thank Javier Cuenca for providing the source used to unify the units of account of Spain and Britain, Rafael Dobado for his valuable comments, and J. P. Reeder for correcting spelling mistakes made by the author. The author, however, retains all responsibility for any remaining errors and omissions. a Faculty of Economics and School of Business Studies, Complutense University of Madrid, Campus de Somosaguas, 28223 Pozuelo de Alarcón, Madrid, Spain (jurado@ccee.ucm.es).
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Historia económica
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5506.06 Historia de la Economía
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