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Yesterday’s Games: Contingency Learning and the Growth of Public Spending, 1890-1938

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  • DUDLEY, Leonard
  • WITT, Ulrich

Abstract

Neither democracy nor globalization can explain the doubling of the peacetime public share in many Western countries between World Wars I and II. Here we examine two other explanations that are consistent with the timing of the observed changes, namely, (1) a shift in the demand for public goods and (2) the effect of war on the willingness to share. We first model each of these approaches as a contingency-learning phenomenon within Schelling’s Multi-Person Dilemma. We then derive verifiable propositions from each hypothesis. National time series of public spending as a share of GNP reveal no unit root but a break in trend, a result shown to favor explanation (2) over (1).

Suggested Citation

  • DUDLEY, Leonard & WITT, Ulrich, 2003. "Yesterday’s Games: Contingency Learning and the Growth of Public Spending, 1890-1938," Cahiers de recherche 2003-20, Universite de Montreal, Departement de sciences economiques.
    • Handle: RePEc:mtl:montde:2003-20
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    More about this item

    Keywords

    Wagner's Law; war; government exnditures; democracy; globalization;
    All these keywords.

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies

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