War and the Growth of Government

Abstract

This paper empirically examines how wars impact the size and scope of government using a panel of all wars from 1960 to 2010 to test the hypothesis that wars are crises that cause an expansion of government in the subsequent period. The results largely support view that wars permanently expand the size of government, although we find no evidence of a permanent increase in the scope of government regulation. We find results are stronger in ten year periods than five year periods.

Keywords: War, Economic Freedom, Size of Government, Institutional Change

JEL Classification: H11, H12, N40, P48