IDEAS home Printed from https://ideas.repec.org/p/ajk/ajkpbs/015.html
   My bibliography  Save this paper

The Cost of Populism: Evidence from history

Author

Listed:
  • Manuel Funke

    (Kiel Institute for the World Economy)

  • Moritz Schularick

    (University of Bonn)

  • Christoph Trebesch

    (Kiel Institute for the World Economy)

Abstract

The rise of populism in the past two decades has motivated much work on its drivers, but less is known about its economic and political consequences. This column uses a comprehensive cross-country database on populism dating back to 1900 to offer a historical, long-run perspective. It shows that (1) populism has a long history and is serial in nature – if countries have been governed by a populist once, they are much more likely to see another populist coming to office in the future; (2) populist leadership is economically costly, with a notable long-run decline in consumption and output; and (3) populism is politically disruptive, fostering instability and institutional decay. The analysis suggests that populism is here to stay.

Suggested Citation

  • Manuel Funke & Moritz Schularick & Christoph Trebesch, 2021. "The Cost of Populism: Evidence from history," ECONtribute Policy Brief Series 015, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkpbs:015
    as

    Download full text from publisher

    File URL: https://www.econtribute.de/RePEc/ajk/ajkpbs/ECONtribute_PB_015_2021.pdf
    File Function: First version, 2021
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rudiger Dornbusch & Sebastian Edwards, 1991. "The Macroeconomics of Populism in Latin America," NBER Books, National Bureau of Economic Research, Inc, number dorn91-1, July.
    2. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    3. Rudiger Dornbusch & Sebastian Edwards, 1991. "The Macroeconomics of Populism," NBER Chapters, in: The Macroeconomics of Populism in Latin America, pages 7-13, National Bureau of Economic Research, Inc.
    4. Alan S. Blinder & Mark W. Watson, 2016. "Presidents and the US Economy: An Econometric Exploration," American Economic Review, American Economic Association, vol. 106(4), pages 1015-1045, April.
    5. Jeffrey D. Sachs, 1989. "Social Conflict and Populist Policies in Latin America," NBER Working Papers 2897, National Bureau of Economic Research, Inc.
    6. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Janusz Rybiński, 2021. "Wynalazki wykorzystywane w zarządzaniu przedsiębiorstwem w XIX i XX wieku," Nowoczesne Systemy Zarządzania. Modern Management Systems, Military University of Technology, Faculty of Security, Logistics and Management, Institute of Organization and Management, issue 3, pages 31-44.
    2. Emmanuelle Auriol & Nicolas Bonneton & Mattias Polborn, 2023. "Shaking Up the System: When Populism Disciplines Elite Politicians," CRC TR 224 Discussion Paper Series crctr224_2023_473, University of Bonn and University of Mannheim, Germany.
    3. Bockhaus-Odenthal, Erik & Siegfried, Patrick, 2021. "Agilität über Unternehmensgrenzen hinaus [Agility across Company boundaries]," MPRA Paper 111511, University Library of Munich, Germany.
    4. Fan, Di & Zhang, Ya’nan & Huang, Xinli & Su, Yiyi, 2023. "Varieties of institutional systems, the belt-road initiative, and the patterned investment flows," International Business Review, Elsevier, vol. 32(4).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Manuel Funke & Moritz Schularick & Christoph Trebesch, 2023. "Populist Leaders and the Economy," American Economic Review, American Economic Association, vol. 113(12), pages 3249-3288, December.
    2. Sergei Guriev & Elias Papaioannou, 2022. "The Political Economy of Populism," Journal of Economic Literature, American Economic Association, vol. 60(3), pages 753-832, September.
    3. Pan, Wei-Fong, 2023. "Household debt in the times of populism," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 202-215.
    4. Seghezza, Elena & Pittaluga, Giovanni B., 2018. "Resource rents and populism in resource-dependent economies," European Journal of Political Economy, Elsevier, vol. 54(C), pages 83-88.
    5. Maximiliano Marzetti & Rok Spruk, 2023. "Long-Term Economic Effects of Populist Legal Reforms: Evidence from Argentina," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 60-95, March.
    6. Mejia, Daniel & Posada, Carlos-Esteban, 2007. "Populist policies in the transition to democracy," European Journal of Political Economy, Elsevier, vol. 23(4), pages 932-953, December.
    7. Federico Faveretto & Donato Masciandaro, 2018. "Financial Inequality, group entitlements and populism," BAFFI CAREFIN Working Papers 1892, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    8. Georgy Egorov & Konstantin Sonin, 2013. "A Political Theory of Populism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(2), pages 771-805.
    9. Bresser-Pereira, Luiz Carlos, 2009. "A tendência à sobreapreciação da taxa de câmbio," Textos para discussão 183, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    10. Scartascini, Carlos & Tommasi, Mariano & Ardanaz, Martín, 2010. "Political Institutions, Policymaking, and Economic Policy in Latin America," IDB Publications (Working Papers) 1708, Inter-American Development Bank.
    11. Christopher Ball & Andreas Freytag & Miriam Kautz, 2019. "Populism-What Next? A First Look at Populist Walking-Stick Economies," CESifo Working Paper Series 7914, CESifo.
    12. Rodrigo Barrenechea & Eduardo Dargent, 2020. "Populists and Technocrats in Latin America: Conflict, Cohabitation, and Cooperation," Politics and Governance, Cogitatio Press, vol. 8(4), pages 509-519.
    13. Mihalache, Gabriel, 2020. "Sovereign default resolution through maturity extension," Journal of International Economics, Elsevier, vol. 125(C).
    14. Martin Rode & Julio Revuelta, 2015. "The Wild Bunch! An empirical note on populism and economic institutions," Economics of Governance, Springer, vol. 16(1), pages 73-96, February.
    15. Donato Masciandaro & Davide Romelli, 2018. "Beyond the Central Bank Independence Veil: New Evidence," BAFFI CAREFIN Working Papers 1871, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    16. Donato Masciandaro & Francesco Passarelli, 2020. "Populism, Political Pressure and Central Bank (in)Dependence," Open Economies Review, Springer, vol. 31(3), pages 691-705, July.
    17. Mr. Arvind Subramanian & Mr. Shanker Satyanath, 2004. "What Determines Long-Run Macroeconomic Stability? Democratic Institutions," IMF Working Papers 2004/215, International Monetary Fund.
    18. Maxime Menuet & Hugo Oriola & Patrick Villieu, 2024. "Do conservative central bankers weaken the chances of conservative politicians?," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 62(4), pages 681-738, June.
    19. Daron Acemoğlu & E. Murat Üçer, 2020. "High-Quality Versus Low-Quality Growth in Turkey: Causes and Consequences," World Scientific Book Chapters, in: Asaf Savaş Akat & Seyfettin Gürsel (ed.), TURKISH ECONOMY AT THE CROSSROADS Facing the Challenges Ahead, chapter 3, pages 37-89, World Scientific Publishing Co. Pte. Ltd..
    20. Emre Ünal, 2021. "Economic populism and institutional changes in wage–labor relations," Evolutionary and Institutional Economics Review, Springer, vol. 18(2), pages 407-433, September.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ajk:ajkpbs:015. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ECONtribute Office (email available below). General contact details of provider: https://www.econtribute.de .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.