Wars and State Capacity

Timothy Besley and Torsten Persson ()

Journal of the European Economic Association, 2008, vol. 6, issue 2-3, 522-530

Abstract: The article builds a simple model to investigate how different types of armed conflict shape fiscal capacity: the state's ability to raise revenue from taxes. It starts from the simple observation that external war tends to generate common interests across groups in society, whereas internal, civil war entails deep conflicting interests across groups. Our model predicts that--compared to a society without conflict--civil wars lead to smaller investments in fiscal capacity, whereas prospects of external war generally lead to larger investments. Correlations in international data on conflicts and taxation are, by and large, consistent with these predictions. (JEL: H10, N40, O10) (c) 2008 by the European Economic Association.

JEL-codes: H10 N40 O10 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (113)

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Persistent link: https://EconPapers.repec.org/RePEc:tpr:jeurec:v:6:y:2008:i:2-3:p:522-530

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