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

  • DUDLEY, Leonard
  • WITT, Ulrich

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).

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Paper provided by Universite de Montreal, Departement de sciences economiques in its series Cahiers de recherche with number 2003-20.

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Length: 34 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:mtl:montde:2003-20
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