Did the expansion of democratic institutions play a role in determining central government spending behavior in the 19th and 20th centuries? The link between democracy and increased central government spending is well established for the post-Second World War period, but has never been explored during the first “wave of democracy” and its subsequent reversal, that is 1870–1938. The main contribution of this paper is the compilation of a dataset covering 24 countries over this period to begin to address this question. Utilizing various descriptive techniques, including panel data regressions, we explore correlations between central government spending and the institutional characteristics of regimes. We find that the data are consistent with the hypothesis that democracies have a broader need for legitimization than autocracies as various measures of democracy are associated with higher central government spending. Our results indicate that the extension of franchise had a slight positive impact on central government spending levels, as did a few of the other democracy variables. We also find that early liberal democracies spent less and monarchies more than other regimes; debt increases spending; and participation in the Gold Standard reduced government spending substantially.
The assistance of several scholars is duly recognized in collecting the underlying data in this paper, especially Alan Taylor, Peter Lindert, Mark Harrison, and Zephyr Frank. Also, the helpful criticism of several colleagues has improved this paper tremendously. Jari Eloranta would like to acknowledge the support of Finnish Centre of Excellence project on long-run structures of Finland (1400–2000), and Marie Curie fellowship awarded by the European Union for 2002–2004.
Eloranta, J., Andreev, S. and Osinsky, P. (2014), "Democratization and central government spending, 1870–1938: Emergence of the leviathan?", Research in Economic History (Research in Economic History, Vol. 30), Emerald Group Publishing Limited, pp. 1-46. https://doi.org/10.1108/S0363-3268(2014)0000030001Download as .RIS
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