Seminar

The Rise of Fiscal Capacity

Davide Cantoni (University of Munich)

October 7, 2021, 11:00–12:30

ONLINE

Behavior, Institutions, and Development seminar

Abstract

This paper studies the role of fiscal capacity in European state consolidation. Our analysis isorganized around novel data on the territories and cities of the Holy Roman Empire in theEarly Modern era. Territories implementing an early fiscal reform were more likely to survive,increased in size, and achieved a more compact extent. We provide evidence for the causalinterpretation of these results and show key mechanisms: revenues, military investments, andmarriage success. The imposition of Imperial taxes, which strengthened ruler’s positions andsidelined Estates, exogenously drove the implementation of fiscal centralization, tilting the con-solidating states toward absolutism.