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Does War Makes State? Military Spending and the Italian State building, 1861-1945

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  • Andrea Incerpi
  • Barbara Pistoresi
  • Francesco salsano

Abstract

We present empirical evidence on the relationship between military spending and the expansion of other governmental budgetary heading and tax revenues from the Unification of Italy (1861) up to the end of World War II. Mainly in the years preceding 1922, investments in education and social transfers to families moves together with the defense spending. That is, positive changes in defense implies both an increase in education and in transfers. Moreover, transfers also have a compensatory role during recessive phases. Positive changes in defence do not crowd out the investment in capital spending, while disinvestments in defense are associated with an increase in the investment in capital. The pro-cyclical behavior of the tax revenues is compatible with a debt financing dynamic of many government expenditures. Although our analytic narrative is not universally valid, it can support the persistent centrality of external war in the discontinuous development and expansion of the Italian central State, with some exceptions explained by the historical experience.

Suggested Citation

  • Andrea Incerpi & Barbara Pistoresi & Francesco salsano, 2022. "Does War Makes State? Military Spending and the Italian State building, 1861-1945," Department of Economics 0206, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
    • Handle: RePEc:mod:depeco:0206
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    1. Acemoglu, Daron, 2005. "Politics and economics in weak and strong states," Journal of Monetary Economics, Elsevier, vol. 52(7), pages 1199-1226, October.
    2. Barbara Pistoresi & Francesco Salsano, 2020. "Italian Spending on Education: a Long-Term Perspective," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 10(5), pages 1-1.
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