Trade Booms, Trade Busts, and Sovereign Debt Repayment in Nineteenth-Century Spanish America

During the wars of independence most Spanish American countries accumulated a substantial external debt.  By 1830, each had defaulted.  Government revenues in each of these countries relied heavily on taxation of foreign trade.  These revenues could increase if tax rates rose, or if foreign trade grew, or both.  This paper examines whether Spanish American countries’ debt repayment histories from 1830 to 1914 were systematically related to the evolution of foreign trade and government revenues derived from it.  In particular, it analyzes the sensitivity of these relationships to foreign economic variables that were exogenous, and to trade policy variables under the control of debtor governments.