Government deficits in 1920s less sensitive to economic changes than post-war.
The study compares government spending in the 1920s and 1930s to the post-World War II period. Researchers looked at how deficits changed in response to economic growth and inflation. They used data from 32 countries between 1925-1938. The results show that pre-war deficits were less affected by economic changes compared to post-war deficits. However, both periods had similar patterns in terms of government debt affecting budget deficits.