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Warfare, Fiscal Capacity, and Performance

Mark Dincecco and Jose Prado ()

MPRA Paper from University Library of Munich, Germany

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 (search for similar items in EconPapers)
JEL-codes: H11 O43 N40 (search for similar items in EconPapers)
Date: 2012-03-12
New Economics Papers: this item is included in nep-cwa and nep-his
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