War and the growth of government

- Wars permanently expand the scope of government regulation after the wars are over.
- Wars don't lead to permanently increased government spending.
- We find a Higgsian ratchet in government scope but not size following wars.

This paper empirically examines how wars impact the size and scope of government using a panel of all wars from 1965 to 2010. Higgs (1987) gives us reason to believe that wars may permanently increase government size and scope while Olson (1982) describes how wars can dislodge interest groups and allow for market liberalizing reforms. We find that wars permanently expand the scope of government regulation but do not impact government size systematically across the countries we study.