Populist Leaders and Economic Decline

Most work on populism has investigated the reasons why voters choose populist leaders and governments. In our new research (Funke et al., 2023), we study the economic and political costs of populism and find that it leads to slower economic growth, undermines democratic institutions, and can leave a country more vulnerable to future populist governments. The rise of populism in the past two decades has motivated much work on the determinants of populist voting (see the review by Guriev and Papaioannou, 2020, or Guiso et al., 2017, and Rodrik, 2017). In contrast, we still have limited knowledge of the economic and political consequences of populism. How does the economy perform after populists come to power? Is populism a threat to liberal democracy or not? These questions have not been sufficiently addressed. Moreover, most existing analyses focus on individual countries or data just from the past 20 or 30 years. What is missing is a bigger picture and a global, long-run perspective.