Comparative European Institutions and the Little Divergence, 1385–1800

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 together with spreads for public debt. We find no evidence that the political institutions of Portugal and Spain were worse until the English Civil War.


Introduction
A venerable historical tradition places political institutions at the root of the European divergence. 1 According to North (1990, p.36), "we can learn as much from the dead-end path pursued by Spain and Portugal, with respect to institutional evolution, as we can from the successful paths to evolving more efficient institutions pursued by the Netherlands and England". For this tradition, diverging paths within Europe were already being trodden as far back as the Middle Ages and continued to be so during the early modern period, before accelerating in the nineteenth century. In this spirit, Acemoglu et al. (2005, p.563-9) classify Portugal and Spain around 1500 as absolutist monarchies, which they contrast with the much more constrained institutions of England and the Netherlands. Fukuyama (2011, p. 373), in turn, writes that sixteenth-century Spain was absolutist because it was "not formally accountable to a parliament or any other representative body". 2 Some authors even argue that the political divergence can be traced as far back as the Magna Carta. 3 In a recent book, Hough and Grier (2015, p.98) place the start of political divergence between Spain and England in the 1260s. 4 In this paper we argue, using a new dataset, that English institutional divergence relative to the Iberian kingdoms only started around the mid-seventeenth century. Iberian rulers were not more despotic than others, at least until halfway into the seventeenth century, when their national parliaments ceased to meet, and when English institutions improved. We do not find support for the viewpoint of North and Weingast (1989) that the Glorious Revolution was the single decisive moment for England -though we find that in the margin, it helped to reinforce a process that had long been under way. Instead, the timing of the institutional divergence of England relative to the Iberian nations coincides approximately with the former's Civil War. 5 Our argument that the English political divergence truly began in the mid-seventeenth century gains support from the fact that this was also when English GDP per capita started to grow persistently, structural change began, and fiscal capacity took off in comparative terms (Broadberry et al., 2015;Wallis et al., 2018;Humphries & Weisdorf, 2019;O'Brien, 1 Broadberry (2021a, 2021b calls the economic divergence that took place within Europe the Little Divergence, in contrast to the Great Divergence of Europe vis-à-vis China and other parts of the world. 2 The viewpoint that the medieval English monarchy was more limited finds support in much of the historical literature. As early as 1470, the chief justice of King's Bench, and MP for several constituencies John Fortescue claimed this to be the case (Fortescue, 1775). Alluding to Fortescue, Kishlansky (1997, p.36) claimed that English law and customs "considerably limited the king's ability to suspend the operation of the law, to tax without consent, or to imprison without cause. Over the centuries, through the operation of common law and the accreditation of statute, the English monarchy... was sometimes described as a 'mixed monarchy' to distinguish it from Continental forms of absolutism that were labelled tyranny". Indeed, in the seventeenth-century English Parliament, the "Spanish Monarchy" was a byword for tyranny (Braddick, 2009, p.48). See also North and Thomas (1973, pp.120, 127-8) Tilly (1994), Ertman (1997), Maddicott (2010). 3 For a critical perspective on the myth of parliamentary sovereignty and its relationship with the Magna Carta, see Ormrod (1999, p.19) or McKenna (1979). 4 Bates (2017) similarly argues that England's institutions became superior during the Middle Ages, though the comparison is made with respect to France. Others explicitly bundle the monarchies of Spain with France, claiming that both were already absolute in the sixteenth century Fukuyama (2011, p.373). 5 Coffman, (2013, p.76) writes that "parliamentary control over public finances, transparency in public accounts, accountability via creditor action, and.. deep secondary markets... were in place under the Long Parliament and Commonwealth regimes". 1988). Our goal is not to challenge the causal importance of institutions. Instead, we argue that the large body of literature that claims England's institutions were exceptionally suited for economic growth since the Middle Ages must be revised. Still, institutions mattered. In the three polities we consider here, the timing of institutional change anticipated economic outcomes. England started growing systematically after the mid-seventeenth century, and the growth of Spain and Portugal fizzled out following the worsening of their political institutions, when their parliaments weakened and eventually stopped meeting.
We show that the claim that Iberian political institutions at the start of the sixteenth century (or even earlier) were more "absolutist" than those in England and the Netherlands is not confirmed by the historical evidence. 6 No ruler at that time was in a position to freely impose his or her will and be literally "absolutist". Monarchs had to deal with an array of traditional property rights, contracts, parliaments, and established freedoms. Also, privileges and installed interests further limited their capacity to enforce plans, good or bad (Rosenthal, 1990;Bogart et al., 2010). 7 Hence ruling was more about careful negotiation than plain imposition, notwithstanding the proclamation of the divine rights of several kings. 8 The historical literature shows that it may often not be viable to see cross-country institutional variation under a duality of "extractive" versus "inclusive" institutions (Irigoin & Grafe, 2008, 2013Grafe & Irigoin, 2006Summerhill, 2015;Ogilvie & Carus, 2014;Abad & van Zanden, 2016). 9 Measuring economic and political freedom is fraught with difficulties, even for modern economies (Prados de la Escosura, 2016). Nevertheless, although for premodern economies data limitations are severe, several quantitative indicators allow us to conduct meaningful international comparisons.
First, we assess the changing strength of parliaments over time. In this we follow van Zanden et al. (2011), but improve on their work in a number of ways including the quality 6 The difference in timing that we find has implications for understanding the causes of England's economic development, and conversely, the failure of the Iberian economies. For example, Acemoglu et al. (2005, p.563-9) argue that the executive power being less constrained in Spain and Portugal relative to England and the Netherlands in 1500 led to subsequent institutional and economic divergence; see also Acemoglu and Robinson (2012, p.220). The latter countries' initial institutions would have been beyond a critical threshold which allowed a virtuous circle of economic growth and positive institutional change to take place in interaction with the Atlantic trade. By contrast, the economic and institutional development of the Iberian countries was supposedly held back by extractive institutions -in particular, despotic monarchies (Robinson, 2022;Acemoglu and Robinson, 2019, p.281). 7 While the historiography on Spain and Portugal sometimes recognizes the limitations of the "absolutist" label, it argues that these were weak states (Grafe, 2012;Hespanha, 1994) By contrast, we follow Mann (2012, pp.7-8) in distinguishing distributive power (a zero-sum game) from collective power (state capacity). In the latter sense, Castile and Portugal were strong states, even if, in the former sense, they were constitutionally bound and restrained. Whatever the flaws of their institutions and the miscalculations of their leaders, the Portuguese and the Spanish states were able to convert their subjects' resources into considerable military and political power. of the historical data available for the parliaments of Castile and Portugal. Furthermore, we compare quantitative measures of parliamentary responsiveness to law proposals sent by the constituents and their success rate over time. We also consider the motives for convening a parliament: was it called to enact the laws and reforms demanded by the subjects? Was it convened because taxes were needed for war? Or was it only summoned to solve a dynastic issue? With our new dataset, it is possible to identify when the parliaments effectively acted as constraints on the executive. In particular, we consider the comparative incidence of parliamentary refusals and reductions of monies requested by the rulers over time in these three polities. Additionally, our measurements enable us to determine how many times monarchs imposed "extraordinary" taxes, which in years of peace (or offensive war) can be considered a form of expropriation. We also consider the incidence of forced loans, loan requests, money requests, and non-parliamentary taxes. Finally, we show that bringing to the fore the municipal institutions and their relationship with parliamentary representation does not weaken our argument. Our parliamentary measures show that the influence of parliaments in Portugal and Spain was not weaker than in England until the mid-seventeenth century. 10 Second, we consider the depreciation of coinage over time. Sometimes there were good reasons for rulers debase the coinage (i.e. "defensive" debasements; see (Munro, 2010)). At other times debasements were fiscally motivated, like the "Great Debasement" of Henry VIII. The relative frequency, and the magnitude, of these events across countries provides an independent measure of state predation. During the sixteenth century, both England and the Dutch Republic perform significantly worse than Spain and Portugal according to this measure, and it is not until the seventeenth century that the Spanish monarchy ceased to maintain a stable domestic monetary unit of account.
Third, we look at the evolution of the real interest rates paid on government debt, making sure we are comparing equivalent debt instruments. In his pioneering comparison of nominal interest rates, Epstein (2000, p.19-23) noticed that it was not until the late seventeenth century that England and the Netherlands paid lower rates than their Southern rivals. We improve here on his analysis in four ways: a) we add the case of Portugal and provide further observations for other countries; b) we control for the inflation rate through the Fisher equation, hence being able to calculate real interest rates; c) we restrict the analysis to loans of similar maturities to ensure comparability; d) we use new data from primary sources to estimate the spreads between public and private loans with the same maturities, which is informative about the comparative risk of lending to the ruler. This allows us to compare the credibility of the institutions responsible for public debt operations. We find that credible systems of public debt existed in Portugal and Spain in the sixteenth century, whereas in England they only emerged two centuries later.
In this paper, we present the first systematic quantification of institutional quality during the early modern period. We focus on the comparison of England -a notable case of eventual institutional success -with the politically leading part of Spain, Castile (about 3/4 of Spain) and Portugal, 11 Our main conclusion is that while 1500 is too early for any 10 Our results hence contradict authors who claim, for example, that the Portuguese Cortes had only symbolic importance, with no legislative authority and "limited capacity to resist the royal will" (Graves, 2014b, p.94). 11 It is important to clarify the polities studied here. Wales became formally united to England in 1536, which in turn entered a personal union with Scotland since 1603. The two realms continued to have separate institutions, including parliaments, until the Acts of Union of 1707, which resulted in the creation of the Parliament of Great Britain. Castile was in a personal union with Aragon since 1516, when Charles (who was a grandson of the Catholic Kings) became the king of the two realms. Although under a common 1 3 difference in institutional quality to be noticeable, the Glorious Revolution of 1688-9 is too late. The divergence in political institutions had two aspects to it. First, Iberian checks on royal prerogatives deteriorated gradually. By the end of the seventeenth century, parliaments for practical purposes ceased to meet, and during most of the eighteenth century monarchs regarded their power as unconstrained by law -let alone by representative assemblies. Second, English institutions improved from the mid-seventeenth century onwards, and in the beginning of the following century parliament became permanent. At that point, English institutions were clearly more suited to growth than those of Iberia, and that divergence was to persist into the future.

Historical background
In the last decade, economic historians have produced GDP estimates for early modern Europe. 12 It is hence possible to explore the timing of economic divergence in much more detail and greater precision than was possible by relying on Bairoch et al. (1988)'s urbanization rates as a proxy for income in the early modern period, as older studies have done. Also, the size of a city might not reflect the efficiency-enhancing advances in the division of labor but the fact that urban elites were making use of their political ascendancy over the countryside for extracting rents. 13 This implies that it can be misleading to employ Bairoch et al. (1988)'s urbanization data as a proxy for per capita income, despite its widespread use in economics. 14 While urbanization was an understandable choice as an outcome variable a decade ago, we now have per capita real income data for many countries. It is thus possible to test directly whether "the more rapid economic growth took place in societies with relatively non-absolutist initial institutions, most notably in Britain and the Netherlands. In contrast, countries where the monarchy was highly absolutist, such as Spain and Portugal, experienced only limited growth in the subsequent centuries" (Acemoglu et al., 2005, p.547). 15 As far as economic outcomes are concerned, the data fails to support this statement 12 Jong and Palma (2018) provide a review of the reconstruction methods and Palma (2020) of the sources, the most common being historical account books of long-lasting institutions such as monasteries, universities and landed estates that recorded information such as prices and wages. Additionally, for some countries we have output-side measures. 13 This has been demonstrated for both Tuscan cities and Czech lands (Epstein, 1991;Felice, 2018;Klein & Ogilvie, 2016). 14 Urbanization rates based on an absolute threshold deciding what counts as a city (e.g. having a population over 5,000) suffer from the rarely-noticed problem that they are not independent of scale: population growth over time will create more "cities". A "city" of 6,000 was large in 1200, but modest in 1850. 15 This consensus in the literature that Northwestern Europe must have performed better since an early period is also present in Hough and Grier (2015, p.68), who assume a large early modern "difference in English and Spanish economic growth". monarch, Castile, Aragon, and (since 1512) Navarre all retained their separate administrative and political institutions, including a parliament for the whole of the realm of Aragon, and parliaments (Corts rather than Cortes) for Aragon (proper), Catalonia, and Valencia, plus executive bodies for these two kingdoms called generalitats. In 1715 the new Bourbon dynasty eliminated these differences and the parliaments were united and became the Cortes de los Reinos, which followed the Castilian model. Also, Portugal was in a personal union with Castile between 1580 and 1640 but kept its institutions and empire.
Footnote 11 (continued) 1 3 (Table 1). 16 As the table shows, England only started growing after 1650. Figure 1 shows that for these countries, the different economic performances of Table 1 were not due to catch-up growth, as there was no noticeable divergence in levels until the seventeenth century -with Spain starting to diverge relative to England, followed by Portugal a century later. 17 We argue that the economic divergence which did take place after about 1650 cannot be explained by a supposed original sin of "absolutist" institutions in Iberia already present in the Middle Ages. If by "absolutism" one means a political system in which the executive is not limited by property rights, contracts or laws, then Tudor England was more absolutist than the two Iberian counterparts considered here. For example, Henry VII, who seized the crown on rather dubious grounds, "lived on his own by declaring some of his wealthiest subjects traitors and seizing their estates", while his son Henry VIII "lived on his own by confiscating the lands of the Catholic church" Kishlansky (1997, p.83). 18 The fact that Table 1 Average annual per capita real growth across different periods. Sources: For England, Broadberry et al. (2015); for Spain, Prados de la Escosura et al. (2022); for Portugal, Palma and Reis (2019); for Holland, van Zanden and Van Leeuwen (2012); for France, Nuvolari and Ridolfi (2020); for Italy, Malanima (2011); for Sweden, Krantz (2017) and Schön and Krantz (2012); for Germany, Pfister (2022); for Poland, Malinowski and van Zanden (2017). Annualized growth rates were calculated using the compound growth formula. For Portugal, as per the available data, we assume the 1527 value applies to 1500. Modern borders are used except for England where they correspond to England until 1700 and Great Britain afterwards; Italy, where they correspond to North Hough and Grier (2015) argue for a negative institutional spillover effect from Spain to Mexico. Fukuyama (2011, pp.365-372) similarly argues that Spanish patrimonial absolutism crossed the Atlantic, affecting Spanish America until the present day. For an explanation of Iberian and Latin American comparative decline that relies on events taking place during the early modern period (rather than European medieval institutions), see Abad and Palma (2021). Note that the view that Mexico was poorer than the USA since early colonial times is contradicted by recent evidence (Abad & van Zanden, 2016). 17 Due to the nature of historical national account reconstructions, there is more uncertainty about levels than growth rates (Jong & Palma, 2018) Using the alternative early nineteenth century income benchmarks proposed by Prados de la Escosura (2000) would imply that Spain and Portugal were richer than England until the second half of the seventeenth century (Palma & Santiago-Caballero, forthcoming). 18 While insisting that English institutions were more inclusive by 1500, Acemoglu et al. (2005, p.563-66) recognize that the reign of Henry VIII had been relatively autocratic, and that the civil war mattered. They argue nevertheless that there was already a noticeable difference in the early sixteenth century. In turn, Hough and Grier (2015)'s argument that England's early political development relative to Spain was caused by the smaller size of its territory (p. 99) does not apply to Portugal, which was smaller than England and English property under the Tudors was unprotected from confiscation on behalf of the state is illustrated by events like the Great Debasement, the Dissolution of the Monasteries, the politicization of the Star Chamber, and the capture of the orphans' assets via the Court of Wards until 1641. 19 By contrast, Iberian monarchies had to negotiate and align their material interests and political goals with the representatives of the realm and the owners of property rights, not to mention an independent church. They could not rely on prerogative redistribution of resources imposed by kings endowed with divine right, like the early Stuarts, who were also the heads of the Anglican Church from Henry VIII onwards. As Epstein noted, individual liberties are not necessary conditions for economic growth. States that restrict personal freedoms -in matters of religion, conscience, habeas corpus, or free speech -are not necessarily equally predatory with regards to property rights and market freedom (Epstein, 2000, p.8). At some point, liberties and economic freedom coincided in England and Netherlands, but this was not the result of some path-dependence already in place before 1500.
To the extent that institutions determine economic performance, the mid-seventeenth century surge of England and late petering out of Portuguese growth suggests that institutional divergence was not medieval but occurred during the early modern period. 20 The  Table 1. What is to be noticed here are changes in growth rates over time, not small differences in income levels, because, as explained in the text, small changes in nineteenth-century benchmarks can lead to the whole series shifting up or down 19 For a detailed discussion of the comparative significance of events and organizations such as the Great Debasement, the Star Chamber, and the Court of Wards, see section A4 of the online Appendix.
an early, centralized nation-state. For a detailed discussion of the constitutional strength of the monarchy in England and in the Iberian kingdoms, see our online Appendix, sections A3 and A4.
Footnote 18 (continued) 20 In this paper, we build three new measures. In section A1 of the online Appendix, we also consider an additional, fourth indicator: empirical measures of state capacity. While this does not capture checks on executive power, and hence deserves a separate treatment (see our companion paper, Costa et al. (2022)), it is an indicator of whether these states had the resources to provide public goods and foster and protect the growth of coordinated and competitive markets, along the line of research introduced by Epstein (2000, p.8). This is one area where the historical evolution of England and the Netherlands went ahead of initial institutions that Acemoglu et al. (2005) consider are measured by constraints on executive power and protection of merchant capital and interests. As Polity IV does not supply codes prior to 1800, in order to classify nations by the quality of their institutions these authors use their own coding method whereby descriptive statements are converted, subjectively, into quantities. The procedures they used give rise to three shortcomings. First, their findings are based on formal rules and ignore actual historical events and defacto practices. Second, formal rules are not analyzed in a systematic matter, which brings a high degree of subjectivity to the exercise. Third, rather than a detailed comparative analysis of sources, the only source used is a reference work of a summary encyclopedic nature for "world history", which covers Iberian history in sparse detail (Langer, 1972), and its revised edition, (Stearns, 2001). Together, these issues limit the empirical robustness of the resulting dataset. 21 Acemoglu et al. (2005, p.569) accept that "precise values" are difficult to obtain in this way, but consider that "the general level of constraint on the executive does not appear to be controversial". 22 In the Appendix, we show that using improved Polity IV scores, the Acemoglu et al. (2005) results no longer hold.

Parliaments
In this section we discuss the nature of historical parliaments and compare those of our three polities. We provide comparable quantitative and qualitative evidence about them, including how frequently did they meet, for what motives, and what was their comparative success rate in passing legislation and refusing taxes over time.

Comparability and representation
In the fifteenth-to eighteenth-century European kingdoms, parliament was the main arena in which public interests confronted those of the rulers. Following (Marongiu, 1968, pp.226-8), we consider parliament as an "institution whose members represented the subjects before the executive". 23 Parliaments were noticeably different on account 21 For a detailed critical discussion of the measures used by Acemoglu et al. (2005), see section A2 of our online Appendix, where we build our own executive constraints Polity IV measure, which differs considerably from theirs. 22 Acemoglu et al. (2005) follow North and Thomas (1973) in their views of Spain. The former authors write that their goal is to investigate the hypothesis of the latter, "that post-1500 developments largely reflect divergence between societies that had very different political institutions at the turn of the fifteenth century." North and Thomas (1973, pp.120, 127-8) describe Spain as an absolute monarchy which, similarly to France, "failed to create a set of property rights" and where "the representative bodies gave up effective control over taxation in return for stability and order". 23 Marongiu (1968, pp.226) writes that "where it [a parliament] existed and was able to carry out its functions, the political regime was neither absolutist nor wholly monarchical, but to some extent mixed or dualist". His definition covers the three parliaments considered here, as they voiced the interests of the subjects within the structure of the state. We note that some did not voice the interests of the subjects and were summoned merely to rubber-stamp the decisions of the executive, as in the case of Naples (Marongiu, 1968, pp.148-50. Footnote 20 (continued) other European countries, in particular failed states such as Poland, or failing empires such as the Ottoman and Chinese. Nevertheless, in 1500, Portugal and Spain had higher fiscal capacity than the northwestern European countries (Costa et al., 2022). of different national traditions: England and Portugal kept a representation of the three estates, a trait that Castile abandoned in 1538; in the English Parliament, statutes enacted by the monarch in Parliament became law, whereas Portuguese and Castilian kings could legislate without seeking the consent of their Cortes. To the envy of the North American colonists of the 1760s and 1770s, municipalities in Portuguese America or India eventually acquired the right to participate in the Cortes and discuss taxation and other matters together with their European counterparts: Goa in 1645, Salvador in 1653, and São Luís do Maranhão in 1676 (Goa in India, the latter two in Brazil). 24 Likewise, some Spanish American municipal governments had the right to take part in the Cortes of Castile, although practical considerations prevented municipalities like Santo Domingo, Lima, and Mexico City to exercise that right (Cardim, 2016, p.109-10).
For all their diversity, these assemblies are comparable insofar as they shared key political roles. Their most noteworthy role was to consent to the demands of extraordinary taxation made by the ruler. As the legitimate representatives of the people, English Parliament and the Cortes were entitled to grant the subsidies requested by the ruler and summoned as arbiters in thorny succession issues and other dynastic disputes. The latter was an important function, but hardly a constraint on executive power. Finally, these assemblies were occasionally summoned to participate in wide reforms or important legislation which require debate in, and support of, the parliaments. 25 Indeed, it was this role that led to the summoning of representatives of the popular estate in the 1250s in the three polities considered here (the municipal proctors of León had been summoned earlier, in 1188).
We now compare parliamentary representation across our three polities and show that the English Commons were not better aligned with the public interest. Before the mid-seventeenth century, the mismatch between the interests of the representatives and their constituencies was worse in the Commons than in either of the Cortes. There were considerable differences between the constituencies that formed the "community of the realm" i.e. the political entity that had the power to grant taxes and also had to take part in the remaining roles of parliaments. In England, the Commons combined administrative districts (shires) and municipal towns, whereas in Castile and Portugal only municipalities were summoned. The size, numbers, political capital, and administrative roles of the constituencies were different. In Table 2 we conduct a systematic comparison of the franchises and we find that late medieval institutional differences did not make the English Commons more representative of the interests of the community of the realm than their Iberian counterparts. Our table systematizes the knowledge for c.1500, a period in which allegedly the English institutions were already more responsive to public interest. 26 By then, we should add, the three parliaments in question had already acquired their main institutional features. 27 24 The English historian John Oldmixon noticed in 1708 that: "The Portuguese have so true a notion of the Advantage of such Colonies, that to encourage them, they admit the citizens of Goa to send deputies to sit in the Assembly of Cortez: And if we were ask'd, Why our Colonies have not their Representatives? who could presently give a satisfactory Answer?", cited in Cardim (2016, p.111,note55). 25 The foundation of usury-free pawnshops provides a good illustration of welfare-enhancing reforms prompted by the Cortes in Spain. See section A5 of our online Appendix for details. 26 In order to maintain comparability, we focus on the English Commons and leave aside the House of Lords, even though "networks of patronage and connection often meant that business in Parliament was dominated by Peers" (Braddick, 2009, p.126); see also Graves (2014a, p.85). 27 In the Appendix, we explain in detail how the municipal institutions in the three countries considered were different in their origins and development. These differences did not translate into a more pliable parliament in the two Iberian states. The analysis of the municipal element in the assemblies in fact strengthens our position because the interests of the public were better represented by parliaments dominated by Table 2 Comparative representation in parliaments, circa 1500. Sources: Representatives for England from the list of the 1491 Parliament (History of Parliament); Castile from (Zamora, 1988, p.3, 388, 351-71); for Portugal the list of the 1502 Cortes of Lisbon contains 127 municipalities (Dias, 2001). Population for England from (Broadberry et al., 2015), for Castile, average population per representative from (Zamora, 1988), except for population which we take from (Malanima, 2009). We assume that Castile has 3/4 the population of Spain's 5 million. Portugal from . All else: England from (McKisack, 2019), Castile from (Dias, 2001, p.83-6) and (Thompson, 1982, pp.33-7), and Portugal from (Sousa, 1990b;Domingues & Monteiro, 2018). See the Appendix for further details Notes: For Castile, (Zamora, 1988, p.262) provides a sample of 418 MPs for the period 1476-1515. Of these, 93% were form the municipal government and only a minority was from noble stock (Zamora, 1988, p.262-7). In England, the most important of the MPs, the Speaker of the Commons, was chosen by the king and paid directly by the Crown (Hawkyard, 2010, p.46), like in Castile (Zamora, 1988, p.40). The Speaker had to be a knight of the shire, which was the rule until 1542 (Hawkyard, 2010, p.35-6). and nearly all of the Tudor Speakers were legal experts who served in different branches of the royal administration or judiciary system (Hawkyard, 2010, p

Frequency of parliamentary meetings
Historians have regarded the count of meetings as an indicator of the relative strength of parliaments vis-a-vis the executive ( van Zanden et al., 2011, pp. 35-36). However, while these authors aggregate the total number of meetings by century, our dataset is annual. We hence obtain a clearer picture of their evolution over time. Additionally, instead of counting the number of meetings, we chose to count the number of years in which they met, as this more adequately captures their role as checks on the executive. 28 Brief parliaments in which a tax was duly approved without negotiation or other issues discussed cannot have the same weight as an indecisive parliament that dragged for many sessions because the monarch could not easily impose his or her will. Our starting year is 1385 because this date represents a high-mark for parliamentary sovereignty in the three kingdoms, as the assemblies played a role in electing new monarchs and installing new dynastic lines: Enrique II in Castile (Cortes of Burgos/1366-7); João I in Portugal (Cortes of Coimbra/1385); and in England the deposition of Richard II, which started in the Wonderful Parliament of 1386 and culminated in the second session of the Parliament of Westminster/1397. Thus, we analyze an approximately simultaneous rise of a parliament-supported dynasty in all three cases (using alternative dates, 1366-7 or 1397, would not change our overall results). Figure 2 confirms the higher intensity of parliamentary meetings in England throughout the entire period, even when ignoring the eighteenth century when Parliament was permanent. However, this higher frequency does not go back to circa 1500. The period of 1475-1524 was one in which parliaments met with comparable frequency in all three cases compared. Up to the second half of the seventeenth century the difference between England and Castile is marginal. In sixteenth-century Castile, under Philip II (1556-98) and III (1598-1621), the Cortes met almost continuously. Portugal, nonetheless, diverged earlier from England in this measure, with its Cortes meeting only a few times compared to the other two countries in the sixteenth century. Still, the timing of the decay of the Iberian parliaments clearly contrasts from that of France, whose États Généraux did not meet between 1615 and 1789.

Motives for summoning parliament
Given that parliaments were summoned for different reasons, the count of years in which a parliament met is not a definitive measure. 29 Considering that parliaments could only be summoned by the monarchs, the frequency of parliamentary meetings does not necessarily capture constraints on the rulers. One can even argue that it instead measures the capacity of the monarchy to legitimately bind the kingdom as a whole. Parliaments allowed monarchs to "unite and rule" (Henriques, 2008, p.205) their otherwise heterogeneous and elusive polities. Thus, the frequent convocation of parliaments might simply reflect the acquiescence of the parliament to the will of the ruler. As one of the great constitutional historians wrote, "frequent parliaments were generally regarded as synonyms with frequent taxation" (Stubbs, 1891, vol. II, p.643). During the parliaments called during the Hundred Years War, consent to extraordinary taxes was little more than a formality (Ormrod, 1994). In the case of England,  (1866); Olivera Serrano (1986); González Sánchez (2017). For Portugal, Sousa (1990a, pp.285-468) Serrão (1975), and Cardim (1998, p.96, 101) 29 Parliaments sometimes discussed matters beyond their original summon. For example, in the Portuguese parliaments of the second half of the seventeenth century, extraordinary taxes were often approved, even though the summoning motive was dynastic for those of 1653-4, 1668, 1673-4, 1679-8, and 1697-8. Table 3 Years with a parliament meeting and motives which justified its summoning Sources: same as in Fig. 2. Note that percentages can sum to more than 100%, because some parliaments were summoned for both dynastic and tax reasons. We counted the years in which a given tax was approved (with or without a reduction) or rejected; due to the nature of the sources, in Castile and Portugal we consider the year in which an agreement was reached, while in England the year in which the tax started. From 1707, the Parliament of Great Britain becomes permanent, and it was no longer the responsibility of the monarch to request for extraordinary taxes. In the case of Castile, the Parliament became that of Spain from 1710, although following Castilian custom and meeting only rarely and for ceremonial reasons  "Though Parliament had the right to consent, it is not clear that it had the right of refusal... it was required in time of emergency to ensure the safety of the kingdom" (Kishlansky, 1997, pp.55-6). Table 3 shows the relative frequencies of the relative weights of dynastic issues and taxation requests in the three countries we consider here. 30 Over the period 1450-1550, the Parliament of England met during (marginally) more years than the Castilian Cortes, but it also consented to extraordinary taxation more often. This evidence is hardly compatible with the notion that England had more "constraints on the executive" before the Civil War. As Table 3 shows, Parliament stood about as frequently as the Cortes of Castile, but until 1650 it was mainly summoned to grant extraordinary subsidies and taxes. As a whole, the Portuguese parliament met less frequently than the others, but it also consented to far fewer extraordinary taxes. While the English Parliaments allowed some constituencies to pressure the ruler into redressing grievances and answering petitions, this came at the cost of higher taxes and hence cannot be read as a decisive sign of the Parliament's strength vis-avis the head of state.
As Table 3 shows, in the period up to 1500, the breakdown of parliaments summoned for dynastic issues, taxation and other reasons is similar in the three countries. The majority of meetings were summoned for consenting to taxation, while about one quarter of the parliaments for the three cases were neither summoned for consenting on an extraordinary tax nor because of dynastic issues. It was in such parliaments that the representatives of the people could aspire to affect the executive decisions and reform property rights. When the sessions of parliaments were not dominated by the fiscal or dynastic imperatives of the day there was opportunity for addressing the reforms demanded by the constituencies which could affect economic growth. For example, laws could be enacted which decreased transaction costs by enhancing the performance of the factor markets. 31 According to this breakdown of parliamentary activity, the English Parliament was as likely as the Spanish or Portuguese Cortes to be summoned for taking part in reforms, 32

Parliamentary responsiveness: legislation enacted
The ability of the English Parliament to respond elastically to the needs of the public was an important feature associated with economic development from the eighteenth century (Bogart & Richardson, 2009. While they were active, the Castilian Cortes likewise obtained concessions from the monarch in exchange for subsidies gave way to judicial and administrative reforms that few other parliaments achieved. 33 We now present the first 30 "Extraordinary taxes" were, in England, the thirteenths and tenths, fifteenths and tenths, subsidies, aid and polls. In Portugal, there were the pedidos and serviços, as well as the seventeenth-century contribuições. In Castile, this included the fifteenth-century servicio or moneda, the cientos and the millones. We also counted as extraordinary the first granting of the sisas and the décima, both of which eventually became permanent. Similarly for Castile, the alcabalas were granted permanently in 1390. 31 See Richardson (2009, 2011);Dimitruk (2018); Epstein (2000). 32 For further discussion of the role of the Cortes see the Appendix. With regards to the role of parliaments in financing war, it matters whether the latter was defensive or offensive, an issue which we discuss in detail in the Appendix. Our calculations show that the English sovereign was more likely to be granted taxes in relation to offensive wars which were his or her choice than its Iberian counterparts. 33 See section A5 of our online Appendix. comparative quantitative analysis of the responsiveness of parliaments to law proposals sent by the constituencies. Due to the disorder of extant sources for Portugal, we limit our analysis to a comparison of England and Castile. In Fig. 3, we show that the capacity of parliaments to bring about new laws for most of the sixteenth century was stronger in Castile than in England. In the case of England, note that we assume the bills were genuinely sent by the constituencies and not smuggled into parliament by the Crown or through a client MP or Lord. 34 From around 1600 (which in England correspond to the early Stuarts) the enactment of laws fell sharply in both polities. However, England recovered dramatically from the Civil War period, which did not happen in Castile.
An indicator for the strength of the different representative assemblies is their capacity to convert bills or proposals sent forth by the constituencies into laws and administrative remedies. 35 This was the goal of the representatives and the measure that their constituents would use to judge them. In both countries, a law proposal had to navigate considerable obstacles, including opposition by other MPs and the ruler (who could veto proposals). Table 4 shows that there was not much difference between the performance of the parliaments of Castile and England during the 1547-1574 period, and in fact Castile performed better during the late sixteenth century. But this trend then suffered a clear reversal.
The success of the English Commons from the second half of the seventeenth century (Hoppit, 2017) contrasts with an earlier lackluster performance. The 72 Elizabethan "vetoes" (Graves, 2014a, p.68) and the hostility of the early Stuarts towards parliament led to a significant decrease of the capacity of the Commons to support the interests of their constituents. 36  Castilla (1604Castilla ( , 1610Castilla ( , 1619. For England, Jha (2015). Note: For the case of Castile, we counted, as laws enacted, the collective proposals by the municipalities -peticiones or capítulos -that were enacted (providas) by the Crown, according to the minutes of each Cortes. A provisión implied that the monarch accepted to remedy the problem exposed by a means of a new law or by changing the existing laws and regulations 34 See Lehmberg (1970, p.23) Note that the same could not happen in either Castile or Portugal due to the stronger alignment between the representatives and their constituencies (see section 3.1). 35 We focus on the two countries' public bills (known as capítulos in Castile), rather than on private bills and petitions, which were also common in Castile. 36 For example, Elizabeth I vetoed around one-fifth of statues.
In contrast, the Cortes of Castile appear more robust during the sixteenth century when, along with some political and fiscal victories, the procuradores secured important laws and changes in the administrative and judicial procedures. This strength would not last, however, and the success rate of the last proposals fell sharply under Philip III (1598-1621), and in 1617 they were last sent to the king (Thompson, 1982, pp.36). Nevertheless, the Kingdom -as the representatives were collectively known -did not lose the capacity to influence legislation altogether, and each new extraordinary tax was tied to a heavy list of some tens of demands that had to be met by the King (Thompson, 1982, pp.38-9). Thus, the end of the Cortes of Castile after 1664 meant a blow on the capacity of the public to affect the laws. 37

Frequency and amount of extraordinary taxes
In all three countries, the monarchy resorted to parliament to secure extraordinary taxes, the collection of which would take one or two years. 38 Despite their theoretical obligation to serve the realm with taxes, parliaments were often passive and merely heeded to any request from the monarch. In the words of Schofield, "as the king was bound to defend the realm, so his subjects were equally bound to assist him in this task" (Schofield, 2008, p.5-6). Consent to taxation was a normal but not necessary outcome of a parliamentary meeting, however. Forceful rulers like Francis I of France could claim that they could extract from their subjects "all that I need, according to my will". 39 However, in There were 6 meetings of the Cortes after 1664 (all during the eighteenth century, and now applying to Spain rather than just Castile), but in all cases these were solely ceremonial. 38 Since the fourteenth century, the English monarchy secured "fifteenths and tenths", a tax that tapped 1/15 or 1/10, depending on the location of the taxpayer and of the movable goods. However, the values paid per geographical unit became fixed in 1334. In 1625, "subsidies" replaced this form of apportioning the tax burden (negotiated in Parliament). In Portugal, extraordinary taxes took the form of a request (pedido), based in assessments that changed a few times (in 1385, in 1437 and possibly in 1460). In Castile, the aids paid by the subjects were called servicios but technically they were a combination of two different taxes (the pedido and the moneda). Later, the servicios became direct taxes on property and/or income. In 1590, the new servicios de milliones were collected as a sales tax (sisa). The Cortes indicated the means of collection and how the money was to be spent, this hence being a budget system (Vives, 1969, p.441). The negotiation, in all cases, was about multiples of a given tax rate. Thus, while Castilian Cortes granted, in 1453, 14 pedidos and 2 monedas, the English were then collecting 1.5 fifteenth and tenths. Two years later, the Portuguese Parliament consented to paying the king 2.5 pedidos. 39 Our translation, from "tout ce dont j'ai besoin, selon ma volonté" (Guéry, 1978, p.223) none of our cases were parliaments as obliging. By then, Francis' great European rival, Emperor Charles V had to face the refusal of the Castilian nobility assembled in the Cortes of Toledo/1538-9 to accept the levying of sales taxes (sisas). Those summoned in Parliament made clear that only extraordinary circumstances justified extraordinary taxes. In the words of Charles V, he would only demand taxes from the Castilian Cortes if he had "just causes", i.e. cases in which "the defense of the realm" was at stake (Colmeiro, 1866). The representatives had some voice in the method of allocating the tax burden and in all three cases we find technical discussions about the relative efficiency and fairness of the different methods. They could also obtain concessions in exchange for their consent and had the option to negotiate the demands of the monarch; consequently, partial grants were more frequent than outright refusals. As Strayer (2005, p.67) writes, "A flat denial was rare -a ruler, after all, probably had some reason for his request -but complete acceptance of government plans were rare too". Note that from around 1700 this comparison is no longer relevant as the two Cortes no longer met for granting taxes to the rulers, and in England it was Parliament, not the ruler, that held the power to tax. Table 5 Magnitude of extraordinary taxes granted by parliament as a percentage of nominal GDP, presented as a range for each 50-year period (median in parenthesis) Sources: for taxes, see the sources of Fig. 2, as well as, for England, Healy (2003Healy ( , 2015; Schofield (1988Schofield ( , 2008; Dowell (1888); for Spain, Fortea (2008); Andrés (1999); Dietz (1921); Zamora (1998); and for Portugal, Henriques (2019). For Castile and England, we considered the actual (not the predicted or granted) yields of the taxes per year; for Portugal, we considered the sum granted by Parliament divided by the number of years since there is no information on yields. For nominal GDPs, England from Broadberry et al.  Figure 4 shows the comparative frequency of extraordinary taxes granted. 40 An important fact shown in the figure is that during the second and third quarters of the sixteenth century, extraordinary taxes were much more frequent in England than in Castile or Portugal. 41 Whereas Table 4 represented a simple count, in Table 5 we show the average magnitude of the extraordinary taxes granted by parliament as a percentage of nominal GDP for each country. 42 We see again that the Parliament of England usually allowed for a higher tax burden than its Iberian counterparts. 43

Tax refusals and reductions
If parliaments were important as checks on the executive, then one obvious point is to look at how often taxes asked for by the king were refused. Table 6 shows these frequencies. 44 We see, once again, that the Parliament of England did not generally refuse taxes more often than those of Portugal and Spain, and in fact it performed considerably worse until the seventeenth century. In the two centuries prior to the seventeenth, English rulers always had their way: there were no refusals at all. In these conditions, summoning a parliament cannot be interpreted as a check on the executive, but more as a "check to the executive" -signed by the taxpayers. 45 The rules in England changed from the second half of the seventeenth century, ultimately leading to the Parliament setting a budget for the Crown. 46 The Cortes of Portugal, on the other hand, refused taxes in 1387, 1459, and 1477, the largest percentage of refused taxes for the 1385-1600 period. A possibility that needs to be raised is that inflexible parliaments met less often, because monarchs would avoid summoning them. It is hence possible that the Portuguese early refusals were an incentive for Portugal's future monarchs to summon parliaments more sparsely. This is also what happened under James I and Charles I in England, and in France, given that the États Généraux were intractable under the Valois and early Bourbon. 40 This table shows the cases where some extraordinary taxes that were granted, not those where they were requested but not granted (which we discuss below). 41 It is true that the nobility was exempt from more taxes in Iberia than in England. This was partly compensated by free military service expected from great and small noblemen in Portugal and Spain, which was not the case in England (Henriques, 2008, p.264-72). Additionally, the nobility (and clergy) did pay several taxes in Iberia. In Spain, the Nobility paid sales taxes (sisas and alcabalas, approved by the Cortes), while Church revenues were liable to pay separate taxes cruzada and servicios. Likewise in Portugal, the Nobility and even the Crown were liable to pay sales taxes, and from 1641, the nobility (and clergy) paid income tax (décima). 42 By extraordinary taxes, we mean one-off taxes (technically, levies), but we follow most of the literature in using the more generic term taxes. 43 Note that Castile and Portugal were tax states since the fourteenth century. Their share of domain revenues was relatively unimportant, and as such, their demand for extraordinary taxation had to be met via parliamentary grants. For evidence and details, see section A5 of the online Appendix. 44 Of course, the table is only suggestive since the amount asked by the ruler in the first place depended, among other factors, on how much the ruler believed it was feasible for the parliament to authorize. 45 Kishlansky (1997, p.55-6) writes that "Before the 1620s.. Parliament existed to do the King's business... Parliament was not an oppositional institution in the early seventeenth century because it was hardly an institution at all. This changed drastically with the Civil War." 46 There were changes soon after the Restoration in 1660, and then with the gradual advent of the civil list and annual budgeting from the 1690s (Roseveare, 1991;Dickson, 1993;Cox, 2016, p.28).
Resistance to taxation by the parliament can also be measured by reductions in the sums asked. These were more frequent than outright refusals. The reductions are shown in Table 7. The number of documented reductions as a percentage of the total approved is considerably smaller in England, although the average English reductions are slightly superior, largely because of the 83% reduction imposed on the exceptionally heavy subsidy demanded by James I in 1610. Most reductions in Castile and Portugal took place in the fifteenth century, while in England they happened in the seventeenth; suggesting that the two Cortes lost influence, whereas the Parliament of England gained strength. 47 It is not possible to dispute that since the early eighteenth century England had a parliamentary regime which aligned the interests of the executive with that of the owners of property and provided a constitutional counterweight to the royal prerogatives. By the same time, the Cortes of Spain were essentially reduced to a ceremonial role, while their Portuguese counterparts did not meet between 1698 and 1828. However, the remarkable trajectory of the English Parliament cannot be projected backwards into the fifteenth or sixteenth centuries. As we have shown, the Cortes of Castile met for the same number of years as in England, whereas the Portuguese Cortes showed that they could effectively  Schofield (2008, p.16) and (History of Parliament); For Castile, they correspond to 1406, 1408, 1430, 1431, 1432, 1433, 1442, 1447, 1448, 1450, 1544, 1596and 1624see Triano Milán (2019). For Portugal, they correspond to 1459-60, 1468, 1475, 1490, and 1674see Sousa (1990a) and Serrão (1975 refuse or scale down subsidies to the king. Also, circa 1500 in these countries the Cortes were a platform for partnership and cooperation between the ruler and the representatives of the ruled, rather than a simple device for levying extraordinary taxes.

Additional measures and discussion
We now present additional measures related to money and finance. They show that around 1500, capital was less protected in England, but over time it became more so relative to Portugal and Spain, where the opposite trend took place (with considerable financial repression since the seventeenth century). We also distill all the previous evidence into a summary table, and we provide additional details in the online Appendix (section B).

Value of coinage
Debasement refers to the reduction of the metallic content of the money of account by the issuer. Such reduction could involve the recoinage of the circulating coins or, given that coins typically did not have a face value, simply by decrying the value of the coin in money of account (in Western Europe, coins circulated by tale, not weight). However, because prices could increase in response to the overall amount of money in circulation, reducing the intrinsic content amounted to an expropriation of the public by the ruler. While this was an expedient way for rulers to assemble resources, the consequences were disruptive for trade, credit, and property rights. Thus, the frequency and intensity of debasements, when not authorized in parliament, can be seen as an indicator of despotism. 48 The monarchs of England had full discretion on all matters monetary, as explained by Sir Thomas Smith in 1562-3: "the prince useth also absolute power in crying and decreeing the money of the realm" (Elton, 1982, p.18). This was proven true by the fiscally-motivated Great Debasement of 1542-55, which led to an overall reduction of 83.1% of the intrinsic content of one penny and a price increase of 123% (Munro, 2010). By contrast, in sixteenth-century Castile monetary reforms were doomed without the formal assent of the people through the Cortes. In the Cortes of Toro-Valladolid/1442, the representatives claimed that the issue of bullion was not a prerogative of the prince and that no change of fineness or standard could be made without the assent of the Cortes (Olivera Serrano, 1986, p.254). Until the reign of Carlos II (1665-1701) kings observed limitations on the quantity of mints and the seigniorage and had to negotiate with Parliament in order to change the metallic content of coinage (Motomura, 1994). The monetary decisions of fifteenth-and sixteenth-century Portuguese kings were also influenced by the Cortes as in Castile. Aggressive or fiscal debasements, absent since the first half of the fifteenth century, only resumed after 1640 when the Cortes explicitly consented them because the country was in a life-or-death war with Spain (Santarém, 1828, p.94).
Overall, when the English public was struggling with the Tudor Debasements, Portuguese and Spanish monarchs did not exploit coinage as a significant source of revenue. In Castile and Portugal, the Cortes kept a role in setting the policy. Hence in this respect, England and the Dutch Republic both fare worse than Iberia during the sixteenth century. Figure 5 illustrates the trajectory of the three states considered here, plus the Dutch Republic. 49 English coinage only became stable in value over the second half of the sixteenth century. In the Dutch Republic, stability came even later -only during the seventeenth century. By contrast, Portuguese coinage was approximately stable from 1500 to 1800, with some adjustments along the way. Spanish coinage was stable in the sixteenth century, though it did experience considerable instability over the seventeenth (Karaman et al., 2020).

Comparative public debt
High default chances are reflected in higher interest rates charged by lenders (a risk premium). 50 This applies particularly to sovereign borrowers, whose position relative to the lender makes contracts impossible to enforce. As succinctly put in the 1540s by the most trusted advisor to the Portuguese king John III, "Merchants cannot incarcerate kings" (Cruz, 2001). 51 Hence, interest rates paid by rulers are an indicator of their commitment to contracts and of the security of property rights. Private lenders demand high interest rates when they perceive that the sovereign is prone to use the state's discretionary powers, as in seventeenth-century France (Root, 1989), or that the political system is too unstable for credible commitment (Clark, 1996). The differences between countries are thus visible in the interest rates charged to the sovereigns. Here we extend the work by Epstein (2000) on comparative interest rates in four main ways. First, we collect additional observations for England, Spain, and the Netherlands; and we include the case of Portugal, which was not included in Epstein (2000)'s sample. Second, we make sure that these observations come from securities with comparable maturities. The nominal interest rates that we use correspond to perpetuities, i.e. securities with an infinite maturity (although the state could and often did redeem the principal). As such, in the four countries and in the three centuries studied we can observe the same financial instrument, the interest-bearing perpetuity (or a close equivalent). The third way in which we improve on earlier work is that we compare real instead of nominal interest rates. The Fisher equation states that 1 + i = (1 + r)(1 + ) , where i corresponds to the nominal interest rate, r to the real interest rate, and to the rate of inflation. 52 Finally, in the following subsection we will consider interest rate spreads: the difference between the rates at which the public and private sector could borrow.
Circa 1500, our three states had varying degrees of involvement in the financial markets. Under Spain's Catholic Kings, Castile sold perpetuities payable from ordinary tax revenues. Originally, these "rights" (hence, juros, from Latin jus, juris) were granted as a reward for military services or as alms for church institutions. But the reliability of the tax administration of the Crown made them an attractive proposition to investors; thus emerged the juro al quitar, a redeemable perpetuity paid out of tax revenues. It became the mainstay of the Spanish public credit system. The overall sums involved in this early phase were modest and redemptions of juros were common in the early sixteenth century (Gálvez, 2015). Portugal followed the Castilian example in selling juros in 1500. Like their Spanish counterparts, the Portuguese juros were redeemable and assigned to the country's buoyant fiscal revenues (Henriques, 2008).
The credibility of public debt system rested on the state's fiscal capacity and indirectly of the approval of taxes by the Parliament. The taxes approved by the Cortes determined the ceiling for the service of public debt (Álvarez-Nogal and Chamley, 2014, p.194). Both Cortes opposed the use of extraordinary parliamentary taxation for servicing new issuances. As the example of late seventeenth-century England shows, the credibility of public debt also depended on the soundness of the administration (Cox, 2016, p.49). For the reliability of their performance, the Portuguese and Spanish juros were traded at par in the secondary market, an indication of their credibility. 53 In contrast to their Iberian rivals, the Tudors and Stuarts could not count on a system of public debt. Given the frequency and magnitude of taxes granted by Parliament (together with the low commitment perceived by investors), the rulers of England had little incentive to develop one. Prior to the Civil War, rulers enticed merchants, goldsmiths and the city of London to lend using a variable combination of coercion, commercial privileges, and interest payments. For instance, when war with Spain broke out in 1625, "Charles sought to raise money without parliament by means of a forced loan. Direct pressure was applied to individuals, and those who refused to pay risked having troops billeted to them, or imprisonment" (Braddick, 2009, p.45). Forced loans were common until the Civil War. The last English forced loan took place during the exceptional circumstance known as the 1672 "Stop of the Exchequer", when Charles borrowed at 6%, which was below what he usually paid (Homer and Sylla, 2005, p.122-124). Overall, the key underlying factor which differentiated public from private loans was that "the royal immunity from the ordinary legal processes which were open to any lender in claiming redress from a defaulting debtor undoubtedly reduced the attractiveness of royal securities as a financial investment" (Ashton, 1960, p.10). Figure 6 shows a comparison of the various alternatives to having a system of public debt and to parliamentary taxation: we consider the incidence of forced loans, loan requests, ad hoc money requests, and non-parliamentary taxes over time across our three polities. Until the mid-seventeenth century, England was the most common offender. 54 After the Civil War, however, we observe no more instances of either forced loans, loan or money requests in England (despite the Stop the Exchequer of 1672 which was a default), while they became increasingly common in Castile and Portugal, as did non-parliamentary taxes.
Given these commitment problems, maturities for public debt were short (Cox, 2016). Lack of credibility meant that England could not organize a debt system based on longterm lending until the 1730s. 55 In the seventeenth century, it was unclear for how long a dynasty would last, and whether the next would default on the debts of the previous one. Life annuities and perpetuities paid on Crown lands were the only exception to short-term 53 See Costa (1883) and Toboso (1987, p.91). 54 English forced loans could be large. For example, in London, there was a forced loan of 20,000 pounds sterling in 1544 (The National Archives E 179, N.558); see also Archer (2001, ). This happened at a time when London's population was around 100,000 and unskilled building laborers earned 2.435p per day (Harding, 1990;Clark, 2005) Hence (ignoring distributional matters), this corresponded to nearly 20 days of work per head. 55 The credibility of English public debt improved with the institutional changes following the Glorious Revolution, including the creation of the Bank of England (Cox, 2016;O'Brien & Palma, 2023) Earlier, one simple measure of the lack of state credibility is the number of external defaults. Between 1300 and 1550, Spain and Portugal never defaulted, while England did so twice (in 1340 and 1472). We are here relying on (Reinhart & Rogoff, 2009)'s definition of default. These authors additionally consider Henry VIII's 1544-51 "epic debasement" as amounting to a default. There was another default in 1594, though there is uncertainty about whether this was an internal or external default (Reinhart and Rogoff, 2009, p.87). By contrast, Spain's first default was in 1557 (after which others followed), and Portugal's only default in the early modern period was in 1560. lending. A proper "national debt system" with long-term maturities and secured by revenues, like the one that existed in Portugal and Spain, only emerged with the financial experiments of the 1690s (Dickson, 1993, pp.48-49,60). But, even then, there was an "absence of an effective market in which lenders could sell their claim on the state" (Dickson, 1993, p.36) and the secondary market for English long-term debt remained "extremely illiquid" until 1720 (Sussman & Yafeh, 2006).
Our findings concerning comparative real interest rates of public debt over time, shown in Fig. 7, are in line with the evidence previously shown in this paper. In the sixteenth and early seventeenth centuries, Castile and Portugal display a considerable advantage hinting at higher credibility and less fear of expropriation. By contrast, England was unable to borrow long-term prior to the mid-seventeenth century. By the early eighteenth century, however, England and Holland were paying lower interest rates than Portugal, and Castile was Fig. 6 Comparative forced loans, loan requests, money requests, and non-parliamentary taxes Sources: See the Appendix unable to issue long-term debt. 56 As England reaped the benefits of institutional reforms happening from the early 1700s which made parliament responsible for earmarking sovereign debt funds (Cox, 2016, pp. 57, 75,125), its cost of borrowing fell considerably, and permanently.

Comparative private loans and risk premia
An additional way of looking at the credibility of the sovereign lender is to measure the risk premium implied in the spread between private and public loans with identical maturities. In developed economies, the private sector pays a risk premium over government bonds, but in the early modern period the opposite was often the case. In England, as mentioned, there were no long-term public loans before the mid-seventeenth century, hence a comparison with private rates is not possible until then. Long-term borrowing by the state was uncommon before the eighteenth century. Around 1650 the government was able to finance itself at 11.2% while the private sector paid on average 5.5%. 57 In the following decades, this large spread steadily decreased. The reliability of the English executive improved with the Long Parliament (1640-1660), when Parliament acquired more control over the executive, in particular with regards to public borrowing, marking "an obvious break in the history of the relations between the government and the money market" (Ashton, 1960, p.46). As a result, risk premia on perpetuities evolved as follows. By 1680-1699, the public sector was paying 7.7% while the private sector paid 5.0%. Over 1700-19 the difference continued to shrink: the public sector paid 6.7% while the private sector 4.9%. From 1720-39 onward, the tables turned as the market then judged the public sector to be less risky: it paid 3.6% while the private sector 4.6%. In all subsequent periods until the end of the century, the government's funding costs were lower than those of the private sector, with a spread standing at less than 1% point. 58 Note that the convergence of public to private rates and ultimately the flipping of the risk premia from the 1720s was driven by a fall in the rates of public borrowing -from 11.2% around 1650 to less than 4.5% by the end of the eighteenth century (over the same period, private rates only fell by less than one percentage 56 Castile's inability to borrow long-term after the mid-seventeenth century can be justified by the absence of parlimentary taxation which served as collateral for further issues of juros Thus, (Alvarez-Nogal, 2003, p.42), writes that for the Castilian Crown, "[a]fter 1650... the game of credit was over". It was only more than a century later, in 1769 that lifetime annuities known as fondo vitalicio were issued with a nominal interest rate of 9%, and again in 1782 with a nominal interest rate of 8%. Finally, annuities with a maturity of 20 years known as vales reales were issued in 1780 with a nominal interest rate of 4% (Torres Sánchez, 2008). By contrast, Portugal's Crown continued to borrow during the eighteenth century, as Fig. 7 shows. However, the interest rates paid by Portugal's monarchs in the eighteenth century would have been considerably higher were it not for the fact that from 1698 a legal maximum of 5% interest was imposed on all private perpetuities. Additionally, from the 1770s the Portuguese Crown forbade the country's largest charitable foundation (Misericórdia de Lisboa) -which doubled as a bank -from lending to the private sector (Rodrigues, 2019). This considerably increased, by force, the liquidity which could be absorbed by public borrowing at an artificially low interest rate. 57 Our sources for the public borrowing interest rates, which we cite here and in the following paragraphs, are those of Fig. 7; we take the English private sector perpetuity rates from Clark (1996). 58 Public vs. private interest rates for perpetual loans in the following periods were: 3.3% against 4.2% in 1740-59; 4% against 4.31% in 1760-79; 4.4% against 4.7% in 1780-99. The sources for the public rates we cite are those of Fig. 7; we take the private sector rates from Clark (1996). point). These timings fit well with what we find in the rest of this paper: English institutions first improved markedly as a result of the Civil War, and then steadily continued to improve. 59 The institutional path of the monarchies of Spain and Portugal was the mirror image of that of England. Not only were the Iberian crowns able to borrow long-term in the sixteenth and early seventeenth centuries, as Fig. 7 shows, but they also did so frequently. They paid low interest rates, at levels which England would only approach in the second half of the seventeenth century. Additionally, for most of the sixteenth century the rates paid by the Iberian monarchies were in line or even below those practiced in the domestic Fig. 7 Real interest rates of new issues of long-term public debt Sources and notes: Maturities are infinite (perpetuities, perpetual annuities, consols, or equivalent), unless noted. Debt was redeemable and tradable, but the extent and liquidity of secondary markets varied across countries and time periods (see text). In years of multiple issues, we use the average interest rate. Holland's high interest rate for 1574 (20% nominal) not shown. Sources for nominal interest rates: For Castile, Álvarez-Nogal (1997Álvarez-Nogal ( , 2009, Gálvez (2015), Toboso (1987), and Andrés and Lanza (s.d.); for Portugal, Costa (1883) and Costa (2017); for Holland, Van Der Ent et al. (1999); for England, Dickson (1993, tables 2, 3, 6, 22) and Clark (1996, p.566). The data for England refers to perpetuities, except for 1693 (99-year maturity), and 1711 (32-year maturity). For 1650, we used the estimated yield for a perpetuity paid on Crown lands (Clark, 1996, p.566). Sources for inflation rates (21-year average around each issue): for Spain, the CPI of Álvarez-Nogal and Prados de la Escosura (2013); for Portugal, the CPI of Palma and Reis (2019), for England, the GDP deflator of Broadberry et al. (2015), and for Holland, van Zanden and Van Leeuwen (2012). When the CPI is given by the authors in silver units, we converted it to monetary units of account using Karaman et al. (2020) private markets. 60 From the 1630s, forced sales of juros became common in Spain, though not yet in Portugal, and from the 1660s it was no longer possible to issue juros due to lack of credibility (Toboso, 1987(Toboso, , p.1600. For more than a century afterwards, Spain was not able to borrow under long maturities; and the Portuguese state was only able to do so due to some degree of coercion (Rodrigues, 2019). 61 In Castile, during 1500-19, the Crown paid 7.14% while the private sector paid an average of 10.1%. 62 Hence, Spanish monarchs were not perceived as less trustworthy than the typical domestic borrower. Note that the low interest rates paid by rulers cannot be explained by coercion exerted on the owners of capital, since there were no interest rate caps until the Cortes of 1534, when the representatives' demand for a 7.14% interest rate cap was accepted by the monarch (Gálvez, 2015). 63 In subsequent periods until the 1580s, interest rates for perpetuities hovered around 6-8%, and average public-private spreads were smaller than one percentage point. 64 Our archival sources show that over the seventeenth century, spreads generally remained at less than one percentage point. 65 The juros started to loose their credibility with the first reduction of interest in 1621 and the suspensions of payments in 1626, 1630and 1634(Álvarez-Nogal, 2009. There was also a 5% interest rate cap decree on private perpetuities since 1608. By the mid-seventeenth century the Crown found it increasingly hard to sell juros, which stopped being issued in the 1660s (Toboso, 1987, p.217).
Our archival sources for Portugal show that public and private perpetuity rates were similar during 1500-1519. 66 We hence confirm the claim by King Manuel I (who reigned 1495-1521) that he simply took market rates: "We have decided to sell our debt titles (juros) at the price of one thousand for fourteen thousand [7.14%], because such is the common rate in our realms". 67 Our research shows that public interest rates were about two percentage points lower than for the private sector during 1520-1579, even though there was no coercion or legal caps in the market at this time. 68 This only happened in 1615 when the monarchy defined a legal maximum (of 5%) in order to make juros more attractive, but this was often circumvented by private lenders via the use of interest payments in kind. However, in 1698 a new law explicitly extended this cap to payments in kind, which had been until then contracted at market rates (Silva, 1854, p.410). Over the eighteenth century, the Crown engaged in other growth-inhibiting, financial repression measures. For example, in order to absorb existing market liquidity, it forbade the country's main charitable foundation 60 As noted by Brumont (1995, p.253-5), for instance. 61 In 1780, the Spanish Crown was able to issue a 20-year liability known as vales reales which doubled as currency (Milhaud, 2018, p.15). 62 Here and in what follows, the public interest rate sources are those of Table 5; for private interest rates we rely on Gálvez (2015) and Borrero Fernández (1986). Usury laws did not apply to private censos or public juros because these contracts contained a buy-back clause. 63 From 1534 a legal maximum of 7.14% (14.000 maravedis el millar) was imposed on private loans (Martínez, 2005). This was usually enforced, and caused the Crown to be able to finance itself at lower rates than would have been possible, rendering a comparison of spreads less meaningful than for earlier periods. 64 For private interest rates we rely on unpublished archival sources. See Appendix C. 65 For sources, see Appendix C. 66 For sources, see Appendix C. 67 From the text of the first juros issued in 1500; none of these loans were forced (Costa, 1883, p.121). 68 We include here instruments the yield of which was paid back in kind as well as currency. For sources, see Appendix C.
(Misericórdia de Lisboa), which often lent money at interest, from lending to the private sector (Rodrigues, 2019). 69

Discussion
All the quantitative institutional measures and the complementary qualitative evidence that we have considered point in the same direction: in Portugal and Spain, institutional quality worsened over the early modern period, while it improved considerably in England. Table 8 distills the comparative evidence that we have discussed (even though it does not summarize all the information that we have covered), 70 In all cases, economic outcomes followed institutional changes: in the long run, the Iberian economies stagnated or declined, while that of England grew. In the latter country, the Civil War and Protectorate ended Stuart absolutism: it was no longer possible to use the Royal prerogative to obtain resources and forced loans. Henceforth, all taxation had to be approved by Parliament. The Glorious Revolution was a further step in the right direction, ultimately leading to ministerial responsibility and improved spending practices (Cox, 2016). More stable institutions and lower internal conflict in England lead to fewer shrinking episodes (Broadberry & Wallis, 2017). 71

Conclusion
Iberia's economic divergence was not a consequence of inferior medieval political institutions. At least prior to the civil wars of the mid seventeenth century, England did not have more constraints on executive power (or an environment more protective of property rights) than Portugal and Spain. The fact that Iberian political institutions were not more despotic than those of England since the Middle Ages contradicts the theses of Tilly (1994), Ertman (1997), Acemoglu et al. (2005), Acemoglu and Robinson (2012, p.220), Acemoglu and Robinson (2019, p.281), Fukuyama (2011, p.373), andHough andGrier (2015). England's institutions eventually became more inclusive, but considerably later. Accordingly, explanations for the Little Divergence among Atlantic traders which rely on variation in the quality of "initial institutions" 69 After the 1730s, the Misericórdias did not purchase public debt in primary or secondary markets (and some of the earlier loans were forced). After a 1770s prohibition, smaller foundations such as the Misericórdia do Porto continued to lend exclusively to the private sector. This illustrates that lending to the public sector was not attractive. Such institutions were, nevertheless, much smaller than the Misericórdia de Lisboa; for example, in 1797 the latter had revenues 6.5 times those of the second largest, the Misericórdia do Porto. 70 In the Appendix, we provide more comparative details about the three polities considered here and all the sources which we relied on to build it. The evidence supports the viewpoint that English political institutions were not comparatively more inclusive than those of Castile and Portugal until the seventeenth century. But while in England, parliamentary control was gradually achieved over the seventeenth century, with monopoly on the rights to sell sovereign promises in place only after the Glorious Revolution (Cox, 2016) the opposite trend took place over time in Castile and Portugal. 71 While rent-seeking and state capture were rampant in eighteenth century Spain and Portugal, over the same period the English parliament worked actively to reduce mercantilist rents (Cox, 2016, p.107).

Notes:
By financial repression, we refer to transactions whose price reflects state coercion on the capital owners or interest rate caps favorable to the state. From the mid-1690s, the Parliament of England also gained control of ordinary revenues (Cox, 2016, p.28). Portuguese debasements were accepted by the Cortes in the context of an independence war, which lasted until 1668. In Portugal, perpetuities continued to be sold over the eighteenth century but financial repression (forced sales) increased from 1775) (in particular, constraints on executive power by 1500 or earlier), are not supported by the evidence. 72 While 1500 is too early for any significant difference in institutional quality to be noticeable, 1688 is too late. With regards to England, the measures that we present in this paper confirm the views of scholars who argue that the emphasis of North and Weingast (1989) and others on the Glorious Revolution is perhaps misplaced and instead emphasize earlier progress (e.g. (O'Brien, 1988(O'Brien, , 2002(O'Brien, , 2012Jha, 2015;Murrell, 2017;Grajzl & Murrell, 2021a, b;Murrell, 2021)). Prior to 1688, England was already ahead both in terms of checks on executive power and state capacity. At the same time, Iberian institutions experienced a considerable deterioration over the late seventeenth century: the Cortes eventually stopped meeting, the monarchs resorted to monetary manipulations, public debt was issued less frequently, and its secondary market became less liquid.
Our findings also do not lend credence to the modern incarnation of the "Black Legend" (La Leyenda Negra), the notion that the divergent economic trajectories within Europe and the Americas can be explained by an institutional path-dependence going back as far as the sixteenth century or earlier. As argued, when Atlantic trade began, Portugal and Spain could not be dismissed as being "highly absolutist" extractive empires, let alone regarded as endowed with inferior institutions. The right of non-European municipalities to take part in the Cortes is a reminder of how these empires were built under an executive power that had to negotiate instead of simply imposing.
In this paper we show that the Little Divergence in European incomes did not derive from the deus ex machina of institutions going back to the medieval period. Hence, arguably, its origins must be found in events taking place during the early modern period. Moreover, the lackluster economic performance of the Iberian empires and their successor independent states in Latin America was not the result of an institutional path-dependence predetermined by 1500.
Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http:// creat iveco mmons. org/ licen ses/ by/4. 0/. 72 Palma (2019) offers an alternative explanation, which relies on events occurring during the early modern period: the silver and gold mines of the Americas led to a Natural Resource Curse in Iberia, which suffered negative economic and political consequences via Dutch disease and state capture. For recent work finding support for this, see Charotti et al. (2022) and Kedrosky and Palma (2021).