DP15405 Populist Leaders and the Economy

Author(s): Manuel Funke, Moritz Schularick, Christoph Trebesch
Publication Date: October 2020
Date Revised: January 2021
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 long-run cross-country database to study the macroeconomic history of populism. We identify 50 populist presidents and prime ministers from 1900 to 2018 and show that the economic cost of populism is high. After 15 years, GDP per capita is 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.