Democracy, populism and hyperinflation: some evidence from Latin America
AbstractIn this paper we test for the populist view of inflation in South America during the eventful period between 1970 and 2007, a period which captures the latest democratic transition in the continent, episodes of hyperinflation and finally macroeconomic stabilisation. The results—based on panel time-series data and analysis—confirm the prediction which suggests that recently elected governments coming into power after periods of political dictatorship, and which are faced with demand for redistribution, end up engaging in populist (or redistributive) policies, which tend to lead to high inflation and overall poor macroeconomic performance. All in all, we suggest that the implementation of democracy as such requires not only the “right political context”—or an appropriately constrained executive—to work well, but it also must come with certain economic institutions (central bank independence and a credible and responsible fiscal authority), institutions that were (coincidentally) absent in South America right after re-democratisation, but which would presumably raise the costs of pursuing populist policies in the first place. Copyright Springer-Verlag Berlin Heidelberg 2012
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Bibliographic InfoArticle provided by Springer in its journal Economics of Governance.
Volume (Year): 13 (2012)
Issue (Month): 4 (December)
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Web page: http://link.springer.de/link/service/journals/10101/index.htm
Other versions of this item:
- Manoel Bittencourt, 2010. "Democracy, Populism and Hyperinflation(s): Some Evidence from Latin America," Working Papers 169, Economic Research Southern Africa.
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
- N16 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Latin America; Caribbean
- O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
- O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
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- Bittencourt, Manoel, 2011.
"Financial Development and Economic Growth in Latin America: Is Schumpeter Right?,"
Proceedings of the German Development Economics Conference, Berlin 2011
13, Verein für Socialpolitik, Research Committee Development Economics.
- Bittencourt, Manoel, 2012. "Financial development and economic growth in Latin America: Is Schumpeter right?," Journal of Policy Modeling, Elsevier, vol. 34(3), pages 341-355.
- Manoel Bittencourt, 2010. "Financial Development and Economic Growth in Latin America: Is Schumpeter Right?," Working Papers 191, Economic Research Southern Africa.
- Manoel Bittencourt, 2010. "Financial Development and Economic Growth in Latin America: Schumpeter is Right!," Working Papers 201014, University of Pretoria, Department of Economics.
- Manoel Bittencourt, 2010.
"Inflation and Economic Growth in Latin America: Some Panel Time-Series Evidence,"
201011, University of Pretoria, Department of Economics.
- Bittencourt, Manoel, 2012. "Inflation and economic growth in Latin America: Some panel time-series evidence," Economic Modelling, Elsevier, vol. 29(2), pages 333-340.
- Manoel Bittencourt, 2011. "Is Copacabana Still the ‘Little Princess of the Sea’?," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 12(1), pages 11-16, 03.
- Bittencourt, Manoel, 2012. "Inflación y crecimiento económico: Evidencia con datos de panel para América del Sur," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 23, pages 25-38.
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