Macroeconomic Populism in Latin America

66 Pages Posted: 9 Jun 2004 Last revised: 31 Aug 2010

See all articles by Rudiger Dornbusch

Rudiger Dornbusch

Massachusetts Institute of Technology (MIT) (Deceased)

Sebastian Edwards

University of California, Los Angeles (UCLA) - Global Economics and Management (GEM) Area; National Bureau of Economic Research (NBER)

Date Written: May 1989

Abstract

Macroeconomic populism is an approach to economics that emphasizes growth and income distribution and deemphasizes the risks of inflation and deficit finance, external constraints and the reaction of economic agents to aggressive non-market policies. The purpose of our paper is to show that policy experiences in different countries and periods share common features, from the initial conditions, the motivation for policies, the argument that the country's conditions are different, to the ultimate collapse. Our purpose in setting out these experiences, those of Chile under Allende and of Peru under Garcia, is not a righteous assertion of conservative economics, but rather a warning that populist policies do ultimately fail; and when they fail it is always at a frightening cost to the very groups who were supposed to be favored. Our central thesis is that the macroeconomics of various experiences is very much the same, even if the politics differed greatly.

Suggested Citation

Dornbusch, Rudiger W. and Edwards, Sebastian, Macroeconomic Populism in Latin America (May 1989). NBER Working Paper No. w2986, Available at SSRN: https://ssrn.com/abstract=227211

Rudiger W. Dornbusch

Massachusetts Institute of Technology (MIT) (Deceased)

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Sebastian Edwards (Contact Author)

University of California, Los Angeles (UCLA) - Global Economics and Management (GEM) Area ( email )

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