Working Paper: CEPR ID: DP15405
Authors: Manuel Funke; Moritz Schularick; Christoph Trebesch
Abstract: Populism at the country level is at an all-time high, with more than 25% of nations currently governed by populists. How do economies perform under populist leaders? We build a new long-run cross-country database to study the macroeconomic history of populism. We identify 51 populist presidents and prime ministers from 1900 to 2020 and show that the economic cost of populism is high. After 15 years, GDP per capita is 10% lower compared to a plausible non-populist counterfactual. Economic disintegration, decreasing macroeconomic stability, and the erosion of institutions typically go hand in hand with populist rule.
Keywords: populism; protectionism; institutions
JEL Codes: E60; N10; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| populist leadership (D72) | real GDP per capita (O49) |
| populist leadership (D72) | consumption (E21) |
| populist leadership (D72) | economic disintegration (D59) |
| populist leadership (D72) | decreasing macroeconomic stability (E60) |
| populist leadership (D72) | erosion of institutions (O17) |
| populist leadership (D72) | unsustainable macroeconomic policies (E60) |
| populist leadership (D72) | increased debt burdens (F34) |
| populist leadership (D72) | inflation (E31) |
| populist leadership (D72) | erosion of democratic checks and balances (D72) |