https://doi.org/10.52903/wp2024327
WAR, MOBILIZATION, AND FISCAL CAPACITY:
TESTING THE BELLICIST THEORY IN GREECE, 1833-1939
Andreas Kakridis
Department of Political Science and History, Panteion University, Athens, Greece; Bank of Greece, Athens, Greece
ABSTRACT
Constructing a new dataset of Greek public revenues and expenditures for the years 1833 to 1939, this paper finds that war mobilizations undermined tax revenues in the short run, but helped the Greek state increase its fiscal capacity in the long run. Tax revenues increased on the heels of major spikes in defense expenditures, even in cases where mobilizations did not escalate to war. But even in normal times, changes in mili-tary expenditures had a stronger effect on taxes, compared to similar changes in civil-ian outlays. The paper thus provides both data and evidence in support of bellicist theories of state formation for Greece, while also proposing a new approach to testing for the effects of war on fiscal capacity.
JEL-classifications: N43, N44, H6
Keywords: war, taxation, fiscal capacity, military expenditures, state-formation
Acknowledgements and disclaimer: This paper began as a project presented at 2018 Alpha Bank Historical Archives Inter-national Workshop, dedicated to War and the formation of the Greek state, 19th - 21st century. It has since benefited from conversations with Kostas Kostis, George Alogoskoufis, Franciscos Koutentakis and Pantelis Kammas, who have also ventured into the history of nineteenth century Greek public finances. Jennifer Castle’s guid-ance in the implementation of impulse saturation methodology is also gratefully acknowledged. The usual disclaimers apply. The views expressed in this article are those of the author and do not necessarily reflect those of the Bank of Greece or the Eurosystem.
Correspondence:
Andreas Kakridis
Bank of Greece,
21 El. Venizelos Avenue,
102 50, Athens, Greece.
email: akakridis@bankofgreece.gr