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Abstract

Public finances and their interaction with political institutions have emerged as an important causal factor in recent growth literature. We explore a unique source – the tailles levied on Paris by Philip the Fair. The method according to which direct taxation took place in the commune of Paris during the commercial revolution is consistent with a community responsibility system, an institution that facilitated exchange, enhanced the enforcement of property rights and contributed to the cohesive action of the community in the face of attempts of the ruler to infringe on it rights. We model the mechanism used by the city of Paris to collect the taille and show it was efficient and effective. We demonstrate that a simple alternative tax collection mechanism can deliver similar results but has certain drawbacks that undermine the commune’s cohesiveness. Quantitative evidence presented here suggests that the mechanism used resulted in de facto progressive taxation. We also show that Paris was a well integrated and cosmopolitan city – the largest in the medieval West and with the highest relative growth rates.

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