DP15824 Economic and Institutional Consequences of Populism

Author(s): Nicolas Magud, Antonio Spilimbergo
Publication Date: February 2021
Date Revised: February 2021
Keyword(s): Commodity supercycle, institutions, Latin America, political economy, populism
JEL(s): E0, N1
Programme Areas: International Trade and Regional Economics, Development Economics, Economic History, Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15824

We analyze the institutional and economic consequences of populism in Latin America in the last 50 years. Populist regimes weaken institutions and macroeconomic (fiscal, monetary, and external) indicators, resulting in crises and worse income distribution. The duration of populist regimes depends on favorable external conditions. In particular, the commodity super-cycle of the 2000s and easy financing conditions allowed populists to stay in power longer than in past episodes.