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The Cost of Populism: Evidence from history

Author

Listed:
  • Manuel Funke

    (Kiel Institute for the World Economy)

  • Moritz Schularick

    (University of Bonn)

  • Christoph Trebesch

    (Kiel Institute for the World Economy)

Abstract

The rise of populism in the past two decades has motivated much work on its drivers, but less is known about its economic and political consequences. This column uses a comprehensive cross-country database on populism dating back to 1900 to offer a historical, long-run perspective. It shows that (1) populism has a long history and is serial in nature – if countries have been governed by a populist once, they are much more likely to see another populist coming to office in the future; (2) populist leadership is economically costly, with a notable long-run decline in consumption and output; and (3) populism is politically disruptive, fostering instability and institutional decay. The analysis suggests that populism is here to stay.

Suggested Citation

  • Manuel Funke & Moritz Schularick & Christoph Trebesch, 2021. "The Cost of Populism: Evidence from history," ECONtribute Policy Brief Series 015, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkpbs:015
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    File URL: https://www.econtribute.de/RePEc/ajk/ajkpbs/ECONtribute_PB_015_2021.pdf
    File Function: First version, 2021
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    References listed on IDEAS

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    3. Rudiger Dornbusch & Sebastian Edwards, 1991. "The Macroeconomics of Populism in Latin America," NBER Books, National Bureau of Economic Research, Inc, number dorn91-1, July.
    4. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    5. Jeffrey D. Sachs, 1989. "Social Conflict and Populist Policies in Latin America," NBER Working Papers 2897, National Bureau of Economic Research, Inc.
    6. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
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    Cited by:

    1. Janusz Rybiński, 2021. "Wynalazki wykorzystywane w zarządzaniu przedsiębiorstwem w XIX i XX wieku," Nowoczesne Systemy Zarządzania. Modern Management Systems, Military University of Technology, Faculty of Security, Logistics and Management, Institute of Organization and Management, issue 3, pages 31-44.
    2. Fan, Di & Zhang, Ya’nan & Huang, Xinli & Su, Yiyi, 2023. "Varieties of institutional systems, the belt-road initiative, and the patterned investment flows," International Business Review, Elsevier, vol. 32(4).
    3. Emmanuelle Auriol & Nicolas Bonneton & Mattias Polborn, 2023. "Shaking Up the System: When Populism Disciplines Elite Politicians," CRC TR 224 Discussion Paper Series crctr224_2023_473, University of Bonn and University of Mannheim, Germany.
    4. Bockhaus-Odenthal, Erik & Siegfried, Patrick, 2021. "Agilität über Unternehmensgrenzen hinaus [Agility across Company boundaries]," MPRA Paper 111511, University Library of Munich, Germany.
    5. Auriol, Emmanuelle & Bonneton, Nicolas & Polborn, Mattias, 2025. "Political Accountability with Outsiders," TSE Working Papers 25-1646, Toulouse School of Economics (TSE).

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