Yesterday’s Games: Contingency Learning and the Growth of Public Spending, 1890-1938
Series/Report no.Cahier de recherche #2003-20
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).
DUDLEY, Leonard et WITT, Ulrich, «Yesterday’s Games: Contingency Learning and the Growth of Public Spending, 1890-1938», Cahier de recherche #2003-20, Département de sciences économiques, Université de Montréal, 2003, 34 pages.