War, mobilization, and fiscal capacity: testing the bellicist theory in Greece, 1833-1939

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 military expenditures had a stronger effect on taxes, compared to similar changes in civilian 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.