Public Finance and Economic Growth: The Case of Holland in the Seventeenth Century

The debate over the institutions that link economic growth to public finance tends to disregard the need for savings to finance growing public debt. In seventeenth-century Holland the structure, size, and issuing rates of the debt were determined by investors' preferences, wealth accumulation,...

Full description

Saved in:
Bibliographic Details
Published inThe Journal of economic history Vol. 71; no. 1; pp. 1 - 39
Main Authors Gelderblom, Oscar, Jonker, Joost
Format Journal Article
LanguageEnglish
Published New York, USA Cambridge University Press 01.03.2011
Subjects
17th century
Analysis
Annuities
Armed forces
Bargaining
Borrowing
Debt
Debt management
Deficit financing
Economic growth
Economic history
Financial institutions
Funding
Interest rates
Investors
Life annuities
Loans
Property rights
Public debt
Public finance
Studies
Tax reform
Wealth
Netherlands
Online AccessGet full text

Cover

More Information
Summary:The debate over the institutions that link economic growth to public finance tends to disregard the need for savings to finance growing public debt. In seventeenth-century Holland the structure, size, and issuing rates of the debt were determined by investors' preferences, wealth accumulation, and changing private investment opportunities. The growth of savings enabled the creation of a huge debt largely with short-term bills. Issuing rates dropped because savings outstripped private investment alternatives. In Holland, and probably elsewhere as well, credible commitment and efficient fiscal institutions were necessary, but not sufficient to create liquid secondary markets and low costs of capital.
ISSN:0022-0507
1471-6372
DOI:10.1017/S0022050711000015