Working Paper: CEPR ID: DP15824
Authors: Nicolas Magud; Antonio Spilimbergo
Abstract: We analyze the institutional and economic consequences of populism in Latin America in the last 50 years. Populist regimes weaken institutions and macroeconomic (fiscal, monetary, and external) indicators, resulting in crises and worse income distribution. The duration of populist regimes depends on favorable external conditions. In particular, the commodity super-cycle of the 2000s and easy financing conditions allowed populists to stay in power longer than in past episodes.
Keywords: political economy; populism; latin america; institutions; commodity supercycle
JEL Codes: N1; E0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| populism (D72) | weakened institutions (O17) |
| populism (D72) | negative effect on macroeconomic indicators (E60) |
| populism (D72) | crises (H12) |
| populism (D72) | worse income distribution (D31) |
| favorable external conditions (P17) | duration of populist regimes (P16) |
| populism (D72) | weakened democratic accountability (D72) |
| populism (D72) | weakened property rights (P14) |
| populism (D72) | weakened business freedom (P19) |
| populism (D72) | increased public sector size (H19) |
| populism (D72) | deteriorated fiscal balance (H69) |
| populism (D72) | inflation taxes employed (E31) |
| populism (D72) | economic boom that collapses (E32) |
| populism (D72) | worsening income distribution post-populism (F61) |
| favorable external conditions (P17) | implementation of redistributive policies (H23) |
| implementation of redistributive policies (H23) | unsustainable economic outcomes (F69) |