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Shares, Coalition Formation and Political Development: Evidence from Seventeenth Century England

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  • Jha, Saumitra

    (Stanford U)

Abstract

A key challenge for developing societies is to build coalitions across disparate interests in favour of beneficial policies. This paper documents the role of a financial innovation-- shares--in aligning disparate interests in favour of representative government during England's Civil War (1642-48). Using novel micro-data, the paper shows that shareholding was a major determinant of support for political reform by members of parliament. The paper suggests that shares allowed a broad spectrum of investors to benefit from new opportunities overseas. However, overseas rights belonged chiefly to the executive. Thus the introduction of shares aligned incentives in favour of political reforms and overseas policies crucial for growth.

Suggested Citation

  • Jha, Saumitra, 2008. "Shares, Coalition Formation and Political Development: Evidence from Seventeenth Century England," Research Papers 2005, Stanford University, Graduate School of Business.
  • Handle: RePEc:ecl:stabus:2005
    as

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    File URL: http://gsbapps.stanford.edu/researchpapers/library/RP2005.pdf
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    References listed on IDEAS

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    8. Yadira Gonzalez de Lara & Avner Greif & Saumitra Jha, 2008. "The Administrative Foundations of Self-Enforcing Constitutions," American Economic Review, American Economic Association, vol. 98(2), pages 105-109, May.
    9. Sussman, Nathan & Yafeh, Yishay, 2004. "Constitutions and Commitment: Evidence on the Relation Between Institutions and the Cost of Capital," CEPR Discussion Papers 4404, C.E.P.R. Discussion Papers.
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    1. Capitalism - making life better
      by Nicholas Gruen in Club Troppo on 2009-02-09 18:22:33

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    1. > Microeconomics > Transaction Cost Economics

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    2. Cox, Gary W., 2012. "Was the Glorious Revolution a Constitutional Watershed?," The Journal of Economic History, Cambridge University Press, vol. 72(3), pages 567-600, August.

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    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P10 - Economic Systems - - Capitalist Systems - - - General

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