Warfare, Fiscal Capacity, and Performance

Journal of Economic Growth, Vol. 17, No. 3

46 Pages Posted: 16 Nov 2009 Last revised: 4 Jan 2013

See all articles by Mauricio Prado

Mauricio Prado

Copenhagen Business School

Mark Dincecco

University of Michigan at Ann Arbor

Date Written: March 13, 2012

Abstract

We exploit differences in casualties sustained in pre-modern wars to estimate the impact of fiscal capacity on economic performance. In the past, states fought different amounts of external conflicts, of various lengths and magnitudes. To raise the revenues to wage wars, states made fiscal innovations, which persisted and helped to shape current fiscal institutions. Economic historians claim that greater fiscal capacity was the key long-run institutional change brought about by historical conflicts. Using casualties sustained in pre-modern wars to instrument for current fiscal institutions, we estimate substantial impacts of fiscal capacity on GDP per worker. The results are robust to a broad range of specifications, controls, and sub-samples.

Keywords: pre-modern wars, fiscal capacity, public services, worker productivity

JEL Classification: C20, H10, O10, N40

Suggested Citation

Prado, Mauricio and Dincecco, Mark, Warfare, Fiscal Capacity, and Performance (March 13, 2012). Journal of Economic Growth, Vol. 17, No. 3, Available at SSRN: https://ssrn.com/abstract=1506890 or http://dx.doi.org/10.2139/ssrn.1506890

Mauricio Prado

Copenhagen Business School ( email )

Porcelaenshaven 16A
1.91
Frederiksberg, DK - 2000
Denmark
38155635 (Phone)
38152576 (Fax)

HOME PAGE: http://sf.cbs.dk/prado

Mark Dincecco (Contact Author)

University of Michigan at Ann Arbor ( email )

HOME PAGE: http://sites.google.com/umich.edu/dincecco

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