In this paper we combine economic factors that have strong trends and political factors that are stationary in a dynamic, empirical model of the evolution of public policy over a very long period in a stable democracy. The role of variation in the intensity of political competition is the substantive focus of our analysis. The approach we develop is applied to disentangle the contributions of economics and politics to the evolution of public expenditure by the Government of Canada over 130 years, from the origin of the modern state to the end of the 20th century, a long period that has not before been investigated. The degree of political competition emerges robustly as the primary, if not the only important political factor in the long run as well as over shorter horizons.