Debt and Taxes. An History of Innovation
The History of public debt is long and goes back to at least Classical Greece. Though marred by crises, it is mostly a history of innovation. Debt, an instrument that allows us to trade with our future selves, is one of the most important financial innovations in history. States have been among the main borrowers in history for a number of good reasons—from funding public goods to social infrastructure and providing a safety net against large shocks. But as individuals have problems of time inconsistency, so do states and that is reflected in an equally long history of debt crises. States tried to make debt credible by creating new taxes to fund it. The way governments tax has changed over time, partly to meet the needs of their growing debt stocks. Therefore, debt and taxes have had a symbiotic history. The architecture of financial markets was also profoundly influenced by the funding needs of governments and by the willingness of individuals and corporate entities to invest their portfolios in public debt. The debt of credible governments developed into one of the mainstays of financial markets by setting the ‘risk-free’ interest rate and by offering the easiest securities to pledge as collateral for new funding.This conference will showcase new research on key historical innovations—financial, legal, political—that made public debt the powerful instrument it is today. However, innovation is never a linear process, and there have been many cases of false starts and dead ends, as well as recoveries from fiscal crises.
Keynote
Sustained debt reduction: The Jamaica exception
Barry Eichengreen is George C. Pardee and Helen N. Pardee Chair and Distinguished Professor of Economics and Professor of Political Science at the University of California, Berkeley. He is a Research Associate of the National Bureau of Economic Research and Research Fellow of the Centre for Economic Policy Research. In 1997-98 he was Senior Policy Advisor at the International Monetary Fund. Professor Eichengreen is a fellow of the American Academy of Arts and Sciences (class of 1997). He is a distinguished fellow of the American Economic Association (class of 2022), a corresponding fellow of the British Academy (class of 2022), and a Life Fellow of the Cliometric Society (class of 2013). He has held Guggenheim and Fulbright Fellowships and been a fellow of the Center for Advanced Study in the Behavioral Sciences (Palo Alto) and the Institute for Advanced Study (Berlin). For 15 years from 2004 he served as convener of the Bellagio Group of academics and officials. He is a regular monthly columnist for Project Syndicate. Professor Eichengreen has been awarded the Economic History Association’s Jonathan R.T. Hughes Prize for Excellence in Teaching and the University of California at Berkeley Social Science Division’s Distinguished Teaching Award. He is the recipient of a doctor honoris causa from the American University in Paris, and was the 2010 recipient of the Schumpeter Prize from the International Schumpeter Society and the 2022 recipient of the Nessim Habif Prize for Contributions to Science and Industry. He was named one of Foreign Policy Magazine’s 100 Leading Global Thinkers in 2011. He is a past president of the Economic History Association (2010-11). His most recent book is In Defense of Public Debt with Asmaa El-Ganainy, Rui Esteves and Kris Mitchener (Oxford University Press 2021