DP15405 Populist Leaders and the Economy

Author(s): Manuel Funke, Moritz Schularick, Christoph Trebesch
Publication Date: October 2020
Keyword(s): institutions, populism, protectionism
JEL(s): E60, N10, P16
Programme Areas: Public Economics, International Trade and Regional Economics, Economic History, International Macroeconomics and Finance, Monetary Economics and Fluctuations, Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15405

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 cross-country database identifying 50 populist presidents and prime ministers 1900-2018. We find that the economic cost of populism is high. After 15 years, GDP per capita is more than 10% lower compared to a plausible non-populist counterfactual. Rising economic nationalism and protectionism, unsustainable macroeconomic policies, and institutional decay under populist rule do lasting damage to the economy.