Populist Leaders and the Economy
Manuel Funke, Moritz Schularick, Christoph Trebesch
American Economic Review · 2023 · Volume 113 · Issue 12
Abstract
Populism at the country level is at an all-time high, with more than 25 percent 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 percent lower compared to a plausible nonpopulist counterfactual. Economic disintegration, decreasing macroeconomic stability, and the erosion of institutions typically go hand in hand with populist rule.
Keywords
Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior, Macroeconomics: Production, Economic History: Macroeconomics and Monetary Economics, Industrial Structure, Growth, Fluctuations: General, International, or Comparative, Economic History: Government, War, Law, International Relations, and Regulation: General, Institutions and Growth
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