The economic consequences of durable left-populist regimes in Latin America

We study the economic effects of durable left-populist leaders in Latin America. Using synthetic control to create a credible counterfactual for four such regimes, we find that they have, on average, a negative, significant, and sizeable average effect on income. Specifically, these countries at the end of their treatment periods end up over 20% poorer on average than what the average of their synthetic counterfactuals predict. We find negative and significant single country effects on real per-capita GDP in Venezuela, Nicaragua, and Bolivia. Only in Ecuador does GDP keep up with its synthetic counterfactual. We investigate whether there is a trade-off, where national income was sacrificed to improve inequality or health. We find no significant average counter-veiling trade-off in decreased levels of income inequality or infant mortality relative to what the average synthetic predicts.