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The fiscal impact of the War of the Pacific

Author

Listed:
  • Richard Sicotte

    () (University of Vermont, Burlington, VT, USA)

  • Catalina Vizcarra

    () (University of Vermont, Burlington, VT, USA)

  • Kirsten Wandschneider

    () (Occidental College, Los Angeles, CA, USA)

Abstract

In the War of the Pacific (1879–1883), Chile defeated Peru and Bolivia, and acquired territories that contained vast deposits of sodium nitrate, a leading fertilizer. Chile’s export tax on nitrates later accounted for at least one half of all government revenue. We employ a multi-country model of export taxation in order to simulate the potential government revenues that Bolivia, Chile and Peru could have earned under the counterfactual scenario that Chile did not conquer the nitrate-rich provinces of its adversaries. Our results are that Peruvian and Bolivian government revenues could have been at least double their historical levels. We estimate that, over the remainder of the nineteenth century, Chile’s earnings from nitrates would have fallen by 80%.

Suggested Citation

  • Richard Sicotte & Catalina Vizcarra & Kirsten Wandschneider, 2009. "The fiscal impact of the War of the Pacific," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 3(2), pages 97-121, June.
    • Handle: RePEc:afc:cliome:v:3:y:2009:i:2:p:97-121
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    References listed on IDEAS

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    1. Panagariya, Arvind & Schiff, Maurice, 1994. "Can revenue maximizing export taxes yield higher welfare than welfare maximizing export taxes?," Economics Letters, Elsevier, vol. 45(1), pages 79-84, May.
    2. Robinson, James A. & Torvik, Ragnar & Verdier, Thierry, 2006. "Political foundations of the resource curse," Journal of Development Economics, Elsevier, vol. 79(2), pages 447-468, April.
    3. Kamil Yilmaz, 2006. "How much should primary commodity exports be taxed? Nash and Stackelberg equilibria in the Global Cocoa Market," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 15(1), pages 1-26.
    4. John H. Coatsworth & Jeffrey G. Williamson, 2002. "The Roots of Latin American Protectionism: Looking Before the Great Depression," NBER Working Papers 8999, National Bureau of Economic Research, Inc.
    5. José Díaz & Gert Wagner, 2004. "Política Comercial: Instrumentos y Antecedentes. Chile en los Siglos XIX y XX," Documentos de Trabajo 223, Instituto de Economia. Pontificia Universidad Católica de Chile..
    6. Yilmaz, Kamil, 1999. "Optimal export taxes in a multicountry framework," Journal of Development Economics, Elsevier, vol. 60(2), pages 439-465, December.
    7. H. J. Wheeler, 1918. "The Fertilizer Needs of the United States," The Quarterly Journal of Economics, Oxford University Press, vol. 32(2), pages 209-237.
    8. Juan Braun-Llona & Matías Braun-Llona & Ignacio Briones & José Díaz & Rolf Lüders & Gert Wagner, "undated". "Economía Chilena 1810-1995. Estadísticas Históricas," Documentos de Trabajo 187, Instituto de Economia. Pontificia Universidad Católica de Chile..
    9. Gert Wagner, "undated". "Trabajo, Producción y Crecimiento, la Economía Chilena 1860-1930," Documentos de Trabajo 150, Instituto de Economia. Pontificia Universidad Católica de Chile..
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    Citations

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    Cited by:

    1. Marc Badia-Miró & Cristián A. Ducoing, 2014. "The long run development of Chile and the Natural Resources curse. Linkages, policy and growth, 1850-1950," UB Economics Working Papers 2014/318, Universitat de Barcelona, Facultat d'Economia i Empresa, UB Economics.

    More about this item

    Keywords

    Export tax; Nitrates; War of the Pacific; South America;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • N46 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Latin America; Caribbean
    • N76 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Latin America; Caribbean

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