The Fiscal Dimensions of Conflict and Reconstruction

Political violence, coup d'état, civil wars and inter-state wars, all have fiscal dimensions (and sometimes fiscal causes). Who gets what — public employment and public spending — and who has to pay for it, are questions that raise fundamental issues about the distribution of society's resources. These can only be resolved peacefully by some form of social contract, resting on the foundation of effective fiscal institutions (systems of public spending and taxation). Accordingly, the paper contrasts the evolution of fiscal institutions in stable and unstable societies. The paper discusses the likelihood of a fiscal peace dividend, but notes that ‘incomplete' peace — and therefore the continuation of high levels of military spending — limits the scale of the dividend in many cases