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This article provides a new interpretation of Brazil’s independence that relates the process of political emancipation to the Portuguese empire’s fiscal crisis at the beginning of the nineteenth century. We discuss the origins and impact of the fiscal crisis that followed the Napoleonic invasion of Portugal in 1807 and the transfer of the government to Rio de Janeiro. Quantitative evidence shows that expenditures with the palace and the army in Brazil were higher than those discussed in the previous literature. Moreover, the government was only able to finance itself by increasing loans via paper money issuances from the Bank of Brazil. Real wages show that the inflationary policy in the 1810s led to a rapid decline in living standards, fuelling dissatisfaction with the government. Our findings are consistent with views expressed in contemporary official correspondence and parliamentary debates.