Populism-What Next? A First Look at Populist Walking-Stick Economies

46 Pages Posted: 27 Nov 2019

See all articles by Christopher P. Ball

Christopher P. Ball

Quinnipiac University

Andreas Freytag

University of Jena - Department of Economics

Miriam Kautz

Friedrich-Schiller-Universität Jena

Date Written: 2019

Abstract

The recent rise in populist governments has led to much work on the question "why now". Our work takes the next logical step by asking "what next?". That is, given populists in power, what should we expect to be the economic consequences of populist regimes. To answer this, we characterize populist economic policies and argue that they generate an inverted J-curve effect, which we term a "walking stick" effect, in macro-level data, specifically GDP and inflation. To test this claim, we construct a unique data set on 13 Latin American countries from 1976 to 2012 and incorporate more modern and nuanced definitions of populism. Our contribution is both to test the walking stick claim and to present a novel dataset for studying the economic effects of populism. We find compelling evidence for our walking stick hypothesis in both GDP per capita and inflation, suggesting that the answer to "what next" is that we will see on average short-run booms followed by declines under populist regimes.

Keywords: populism, Latin America, business cycle, political economy

JEL Classification: E390, E600, H110, N160

Suggested Citation

Ball, Christopher P. and Freytag, Andreas and Kautz, Miriam, Populism-What Next? A First Look at Populist Walking-Stick Economies (2019). CESifo Working Paper No. 7914, Available at SSRN: https://ssrn.com/abstract=3480920

Christopher P. Ball

Quinnipiac University ( email )

275 Mt. Carmel Avenue
Hamden, CT 06518
United States

Andreas Freytag

University of Jena - Department of Economics ( email )

Carl-Zeiss-Str. 3
07743 Jena
Germany

Miriam Kautz (Contact Author)

Friedrich-Schiller-Universität Jena ( email )

Germany

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