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Yesterday's Games: Contingency Learning and the Growth of Public Spending

Author

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  • L. Dudley
  • U. Witt

Abstract

Between 1890 and 1938, the public share of total spending rose to unprecedented peacetime levels in many Western countries. This development has been explained by either (i) a shift in the demand for public goods or (ii) a restructuring of the state to transfer income. However, neither explanation has been shown to be compatible with individual incentives. Here, we model the rise of public spending as a contingency-learning phenomenon within Schelling’s Multi- Person Dilemma. Tests of the resulting propositions with national time series reveal no unit root but a break in trend, a result shown to favor explanation (ii) over (i).

Suggested Citation

  • L. Dudley & U. Witt, 2002. "Yesterday's Games: Contingency Learning and the Growth of Public Spending," Papers on Economics and Evolution 2002-02, Philipps University Marburg, Department of Geography.
  • Handle: RePEc:esi:evopap:2002-02
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    Citations

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    Cited by:

    1. Winer, Stanley L. & Ferris, J. Stephen, 2008. "Searching for Keynesianism," European Journal of Political Economy, Elsevier, vol. 24(2), pages 294-316, June.
    2. Stanley L. Winer & J Stephen Ferris, 2003. "Searching for Keynes: An Essay on the Political Economy of Fiscal Policy, with Application to Canada, 1870-2000 - revised version," CESifo Working Paper Series 1016, CESifo.

    More about this item

    Keywords

    Government expenditures; public goods; transfer payments; game theory; time series;
    All these keywords.

    JEL classification:

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

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