No debt without taxation. Fiscal policy, institutions and politics in Italy 1350-1700

Renaissance and baroque Italy offers an excellent field to verify the model linking institutions to financial efficiency. Republics, monarchies and principalities actually present different financial and economic structures and performances. A long-period approach, furthermore, permits to both highlight major changes in financial development and control for relations – if any – with political structure. The paper deals with the government debts of Florence, Venice, Milan, and the kingdoms of Naples and Sicily. The first part outlines the main features of deficit financing over time and shows how governments had to face increasing needs of cash in order to finance their political and military engagements. During the later middle ages, Venice and Florence resorted largely to voluntary and compulsory loans, while the Milanese dukes and the Neapolitan kings relied on short-term loans provided by merchant-bankers, courtiers, and officials. From the early sixteenth century on, however, also the Spanish rulers of Milan, Naples, and Sicily increasingly sold annuities and securities on the open market. The second part examines analogies and differences by using also quantitative comparisons.