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Democracy, Populism and Hyperinflation(s): Some Evidence from Latin America

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  • Manoel Bittencourt

Abstract

We test for the populist view of inflation in Latin America between 1970 and 2007. The empirical results - based on the relatively novel panel time-series data and analysis - confirm the theoretical prediction that recently elected governments coming into power after periods of political dictatorship, and which are faced with high economic inequality, end up generating high inflation and macroeconomic instability. 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 (e.g. central bank independence and a credible and responsible fiscal authority), institutions which would raise the costs of pursuing populist policies in the first place.

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Bibliographic Info

Paper provided by Economic Research Southern Africa in its series Working Papers with number 169.

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Length: 21 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:rza:wpaper:169

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Keywords: Democracy; populism; hyperination; Latin America;

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References

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  1. Daron Acemoglu & Simon Johnson & James Robinson & Yunyong Thaicharoen, 2002. "Institutional Causes, Macroeconomic Symptoms: Volatility, Crises and Growth," NBER Working Papers 9124, National Bureau of Economic Research, Inc.
  2. Manoel F. Meyer Bittencourt, 2005. "Macroeconomic Performance and Inequality: Brazil 1983-94," Ibero America Institute for Econ. Research (IAI) Discussion Papers 130, Ibero-America Institute for Economic Research.
  3. Daron Acemoglu & Georgy Egorov & Konstantin Sonin, 2011. "A Political Theory of Populism," NBER Working Papers 17306, National Bureau of Economic Research, Inc.
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Cited by:
  1. Manoel Bittencourt, 2011. "Is Copacabana Still the ‘Little Princess of the Sea’?," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 12(1), pages 11-16, 03.
  2. Manoel Bittencourt, 2010. "Financial Development and Economic Growth in Latin America: Is Schumpeter Right?," Working Papers 191, Economic Research Southern Africa.
  3. Bittencourt, Manoel, 2012. "Inflation and economic growth in Latin America: Some panel time-series evidence," Economic Modelling, Elsevier, Elsevier, vol. 29(2), pages 333-340.
  4. Manoel Bittencourt, 2014. "Democracy and Education: Evidence from the Southern African Development Community," Working Papers 433, Economic Research Southern Africa.
  5. Manoel Bittencourt, 2010. "Financial Development and Economic Growth in Latin America: Schumpeter is Right!," Working Papers 201014, University of Pretoria, Department of Economics.
  6. 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, Banco Central de Reserva del Perú, issue 23, pages 25-38.

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