War, Mobilization, and Fiscal Capacity: Testing the Bellicist Theory in Greece, 1833–1939

Abstract Constructing a new dataset of Greek public revenues and expenditures (1833–1939), this paper finds that war mobilizations undermined tax revenues in the short run, but helped increase fiscal capacity in the long run. Taxes 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, tax revenues responded more to additional military than civilian outlays. The paper thus provides evidence in support of bellicist theories of state formation for Greece while also proposing a new approach to testing the effects of war on fiscal capacity.