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on Positive Political Economics |
| By: | Guenther, Laurenz; Nunnari, Salvatore |
| Abstract: | Research on the rise of populism has largely overlooked the explanation populists themselves advance: that they fill political representation gaps, defined as discrepancies between mainstream parties’ policies and the “popular will.†We test this claim in an information-provision experiment conducted in the weeks leading up to the 2025 German federal election. A sample of 5, 040 German citizens was randomly assigned varying information about the immigration stance of Germany’s mainstream center-right CDU—an issue marked by a substantial representation gap. We find that perceptions of the CDU’s position significantly affect both vote intentions and incentivized behavioral measures: when the CDU is perceived as closer to the electorate’s conservative preferences on immigration, support for the right-wing populist AfD declines. Our estimates indicate that the AfD’s vote share would shrink by as much as 75% if the CDU adopted its immigration stance. These results suggest that the electoral success of populist parties is strongly linked to genuine policy preferences, rather than being driven solely by dissatisfaction with political elites or protest voting. |
| Keywords: | Populism; Elections; Immigration |
| JEL: | D72 C93 K37 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20643 |
| By: | Egorov, Georgy; Guriev, Sergei; Mironov, Maxim; Zhuravskaya, Ekaterina |
| Abstract: | Why do political campaigns so often yield unexpected results? We address this question by separately estimating the direct effect of a campaign on targeted voters and the indirect effect on others in the same social environment. Partnering with a local NGO during Argentina’s 2023 presidential election, we randomized the distribution of leaflets providing an expert assessment of the consequences of the potentially dangerous proposals by the outsider candidate Javier Milei. Exploiting Argentina’s unique sub-precinct election reporting system, we show that the campaign reduced Milei’s support among directly treated voters, as expected, but increased his support among untreated voters in treated precincts, producing a backfiring, net-positive effect for Milei. A pre-registered replication confirmed these opposite-signed effects. Using theory and a survey experiment, we show that the minority of voters who disbelieved the campaign were more motivated to discuss it with peers, convincing them to support Milei. This mobilization effect appears especially likely when campaigns criticize outsider candidates. Our results highlight how campaigns aimed at anti-elite candidates can unintentionally mobilize support for them. |
| Keywords: | Political Information Campaign; Elections; Argentina; Milei; Network effects; Spillovers |
| JEL: | P00 D72 C93 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20781 |
| By: | Dreher, Axel; Pan, Jingke; Schneider, Christina |
| Abstract: | Elections in fragile democracies are not merely contests over policy but battles for control over state resources, including foreign aid. Aid provides local governments with substantial discretionary funds, creating strong incentives for rent-seeking political actors to capture political office. To win elections, political actors, both in government and opposition, try to reduce electoral competition through targeted political violence, especially in weakly institutionalized settings, where the economic stakes from gaining (or losing) office are higher and the potential costs of using targeted violence are limited. We empirically test this argument using novel geo-located data on aid disbursements from 18 European donors and the United States, covering the period from 1990 to 2020. Applying an instrumental variables (IV) approach, we find that foreign aid is associated with higher levels of targeted political violence against local authorities and politicians, in particular during elections and in contexts with weak institutions and strong informal politics. These findings highlight the unintended consequences of foreign aid, showing how it can lead to targeted political violence by increasing the stakes of political competition. |
| Keywords: | Foreign aid; Targeted Political Violence; Elections |
| JEL: | F35 F51 D74 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20389 |
| By: | Gersbach, Hans; Schneider, Maik T.; Tejada, Oriol |
| Abstract: | We study how democracies can manage extremist minority views through Coalition-Preclusion Promises (CPPs), where parties credibly commit to excluding extremists from governing coalitions. We identify conditions under which CPPs improve social welfare by preventing extreme policy shifts. However, these benefits depend on parties’ incentives and voters’ ability to coordinate. The resulting voting game features multiple equilibria, and we extend typical equilibrium selection criteria. Our findings suggest CPPs can be an effective strategy to keep extremist parties out of government. |
| Keywords: | Coalition formation; Political contracts; Elections; Government formation |
| JEL: | D72 D82 H55 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20435 |
| By: | Lockwood, Ben (University of Warwick); Le, Minh Tung (University of Warwick) |
| Abstract: | We analyze the implications of three stylized facts about trust in political institutions for the role of elections in improving discipline, constraining pandering, and improving selection of politicians. First, trust in political institutions (politicians, political parties, and the legislature) has declined in recent years. Second, within countries, there is heterogeneity across citizens in their level of trust in institutions, and third, at the individual level, trust is malleable, especially when young. We add these features to an otherwise standard model of electoral agency. Unlike the standard model, where the quality of the candidate pool is assumed known, citizens are born with imprecise and heterogeneous priors over the quality of the pool, so young citizens learn not only about the incumbent, but also about the pool quality. An increase in precision increases both the discipline and selection effects of elections, whereas an increase in heterogeneity of prior beliefs has the opposite effect. The effect of changes in average trust in the population is generally ambiguous. When candidate entry is modelled, these findings extend to endogenous pool quality. The implications for citizen welfare and civics education are discussed. |
| Keywords: | elections, discipline, pandering, selection, trust in political institutions, civic education JEL codes: H11, C72 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1620 |
| By: | Lockwood, Ben (University of Warwick); Le, Minh Tung (University of Warwick) |
| Abstract: | We analyze the implications of three stylized facts about trust in political institutions for the role of elections in improving discipline, constraining pandering, and improving selection of politicians. First, trust in political institutions (politicians, political parties, and the legislature) has declined in recent years. Second, within countries, there is heterogeneity across citizens in their level of trust in institutions, and third, at the individual level, trust is malleable, especially when young. We add these features to an otherwise standard model of electoral agency. Unlike the standard model, where the quality of the candidate pool is assumed known, citizens are born with imprecise and heterogeneous priors over the quality of the pool, so young citizens learn not only about the incumbent, but also about the pool quality. An increase in precision increases both the discipline and selection effects of elections, whereas an increase in heterogeneity of prior beliefs has the opposite effect. The effect of changes in average trust in the population is generally ambiguous. When candidate entry is modelled, these findings extend to endogenous pool quality. The implications for citizen welfare and civics education are discussed. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:wqapec:30 |
| By: | Gersbach, Hans |
| Abstract: | We present Pendular Voting as a novel two-stage voting procedure with applications to direct and representative democracies. A randomly chosen citizen group first votes on a proposal replacing the status quo. Depending on the outcome, a “counterproposal†ensues, positioned closer to or further away from the status quo than the original proposal. All citizens then vote pairwise on the status quo, the initial proposal, and the counterproposal, with the middle alternative prevailing in the case of cyclical collective preferences. We analyze the process on a one-dimensional policy space under uncertainty about preference distribution, showing that manipulation is confined to the first stage, but does not affect the final outcome. Even with selfish agenda setters, Pendular Voting can deliver results closer to the median voter’s preferences than standard procedures. In parliamentary contexts, pairing bills with structured counterproposals could shift outcomes toward the chamber’s median preference while reducing agenda manipulation. |
| Keywords: | Democracy; Manipulation; Information sharing; Referendum |
| JEL: | C72 D70 D72 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20656 |
| By: | Bombardini, Matilde; Finan, Frederico; Longuet-Marx, Nicolas; Naidu, Suresh; Trebbi, Francesco |
| Abstract: | We study the effects of climate change and mitigation-related employment changes on U.S. politics. We combine 2000-2020 precinct-level voting information and congressional candidate positions on environmental policy with high-resolution temperature, precipitation, and census block-group level measures of “green†and “brown†employment shares. Holding politician positions fixed within a district, we find that Democratic vote shares increase with exogenous changes in local climate and green transition employment. We embed these estimates into a model of political competition, including both direct and demand-driven effects of shocks on candidate supply of climate policy positions. Incorporating these estimates into 2022-2050 projections of climate change and green employment transition, we find that voting for the Democratic Party increases, while both parties move slightly to the right on climate policy. Under worst-case climate projections and current mitigation trajectories, our estimates indicate that the probability the House passes a carbon-pricing bill is 9 percentage points higher in 2050 than in 2020. |
| JEL: | P0 D72 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20578 |
| By: | Koetter, Michael; Popov, Alexander |
| Abstract: | Exploiting three decades of detailed regional data for Germany, we find that when the Green Party is successful at the polls, local hazardous emissions decline. The level of political representation matters, too. Green politicians’ gaining influence at county level is followed largely by a decline in air pollutants that have an immediate adverse health effect. In contrast, when the Green party joins the state government, only greenhouse gas emissions that affect the welfare of future generations via climate change decline. The primary mechanism to achieve lower emissions appears to be a reduction in output, rather than more efficient energy use. |
| Keywords: | Elections; Growth |
| JEL: | D72 Q53 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20773 |
| By: | Besley, Tim; Brzezinski, Adam |
| Abstract: | We develop a dynamic model where two parties compete for office by offering policies supported by narratives that describe policy effects. Voters demand narratives that suit their interests based on motivated reasoning and parties supply narratives to win elections. Over time, the set of narratives can expand endogenously. We characterize equilibrium paths and show how polarizing narratives can benefit a party through enabling policy differentiation. We then develop a specific application to ``neoliberalism'', a policy narrative that gained currency in the late 1970s. Our analysis clarifies why the 1970s oil shocks incentivized parties on the right to supply neoliberal narratives and why that prompted parties on the left to respond with the ``Third Way'' narrative that became a new consensus. These narrative dynamics were precipitated by a temporary shock but permanently altered the policy equilibrium, preventing a return to the old post-war consensus. |
| JEL: | D72 D91 H11 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20410 |
| By: | Desmet, Klaus; Ortuño-Ortin, Ignacio; Wacziarg, Romain |
| Abstract: | We develop a new method to endogenously partition society into groups based on homophily in values, using fractional hedonic games as a theoretical foundation. The between-group differentiation that results from this partition provides a novel measure of latent polarization in society. We implement this method empirically using U.S. data from the World Values Survey. For the last forty years, the degree of latent polarization of the U.S. public has been high and relatively stable. In contrast, the degree of values polarization between voters of the two main political parties has steadily increased since the 1990s, and is now converging toward that of underlying values-based clusters. Thus, growing partisan polarization in the U.S. is a reflection of partisan views becoming increasingly aligned with the main values based clusters in society. |
| Keywords: | partisan polarization; social polarization; Homophily; Values-based clusters |
| JEL: | D71 D72 Z1 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20644 |
| By: | Mirza, Rinchan; Malik, Adeel; Platteau, Jean-Philippe |
| Abstract: | How political dynasties affect economic development in the context of poor countries is a moot question. Theoretical predictions do not yield a clear answer and empirical studies remain few. In this paper, we estimate the impact of entrenched political dynasties on local development in Pakistan’s largest province, Punjab. Toward this purpose, we compile an original database on political genealogies, which includes information about the personal and family characteristics of both elected representatives and the main contenders in elections for the last one hundred years covering both elections held under colonial rule and Pakistan’s modern political existence. Three main findings emerge. First, entrenched political dynasties are historical families whose influence dates back to the colonial period. Second, using a close elections regression discontinuity design, we show that historical families have a worse development impact than non-historic families. Third, based on complementary surveys, we argue that segmented political markets simultaneously account for the long-term persistence of historic families and their negative development impact under conditions of competitive clientelism. |
| JEL: | D02 D72 H70 O12 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20347 |
| By: | Rodríguez-Pose, Andrés; You, Zhuoying; Teirlinck, Peter |
| Abstract: | This paper explores the relationship between support for extreme political parties and research and innovation across regions in the European Union (EU). Extreme parties often exhibit deep scepticism towards expertise and science, with extreme right-wing parties, in particular, challenging the legitimacy of climate change; an attitude that may weaken green research and innovation. We draw on data from 1, 137 EU regions — including scientific publication and patent records — and apply Tobit regression models to find that stronger support for extreme parties is associated with lower levels of scientific research and technological innovation, both overall and in their green forms. While this pattern is visible across the political spectrum, important differences emerge. Support for extreme right-wing parties is consistently tied to reduced research output and innovation performance, particularly in green technological sectors. By contrast, the relationship with extreme left-wing support is more variable, depending on the degree of radicalism, and shows no consistent negative connection with green innovation. |
| Keywords: | Europe |
| JEL: | D72 D74 O32 O33 R10 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20598 |
| By: | Chung, Wanyu; Dai, Duiyi; Elliott, Robert |
| Abstract: | In this paper, we investigate whether, and to what extent, UK newspapers exhibited image-based bias in their portrayal of politicians during the 2016 Brexit referendum, potentially shaping public perceptions. We use computer vision and machine learning techniques to first, identify the faces of politicians and assess the emotional content conveyed through their expressions and second, to measure the contextual sentiment of the overall image, including elements such as background, objects, and color. Our findings reveal that tabloid newspapers displayed significant partisan bias. Specifically, pro-leave tabloids were more likely to depict pro-leave politicians with positive facial expressions and in more favorable visual contexts, while pro-remain politicians were portrayed more negatively. This bias was especially pronounced in front-page images and those featuring key political figures, while no comparable patterns were found in broadsheets. However, the visual bias diminished immediately after the referendum vote. Our scalable framework offers a systematic way to detect visual bias in political imagery, with broader applicability to media coverage of other electoral or policy events. |
| Keywords: | Visual media bias; image analysis; Machine learning; Brexit referendum |
| JEL: | L82 D91 D83 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20524 |
| By: | Felix Bierbrauer; Mattias Polborn; Marten Ritterrath; Georg Weizsäcker |
| Abstract: | We study the political economy of carbon taxes when neoclassical consumers take all other agents' emissions as given and socially responsible consumers internalize damages in a group-rule-utilitarian way, taking neoclassical consumers' behavior as given. We characterize political equilibrium taxes with a focus on deviations from first-best Pigouvian taxation. Welfare falls further if arguments on moral obligations to reduce carbon footprints polarize the debate in society. Finally, we present survey evidence that supports our theory: social responsibility correlates with lower consumption of brown goods, higher preferred carbon taxes, and support for moral arguments. |
| Keywords: | political economy of taxation, carbon taxes, ethical behavior |
| JEL: | C9 D11 D72 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12758 |
| By: | Campbell, Arthur; Leister, Matthew; Ushchev, Philip; Zenou, Yves |
| Abstract: | We develop a simple model of content filtering-the tendency of individuals to selectively forward information that aligns with their ideological preference-to study how network structure shapes the distribution of political content. In our framework, individuals and content are horizontally differentiated into three types (left, middle, right). We show that content filtering can amplify the middle or the extremes and may result in only centrist content (full moderation) or only extreme content (full polarization). The outcome depends on the interaction between two forces: a preference advantage from the relative prevalence of types in the population, and a pairwise comparison advantage that systematically favors centrist content. Network density plays a critical role. Sparse networks robustly yield moderation, even when extreme types dominate the population, while dense networks replicate the population's type distribution. Intermediate densities generate non-monotonic comparative statics, including sharp transitions between moderation and polarization. These findings complement existing empirical results that emphasize the types of connections individuals have on social media by highlighting how the number of connections, holding their composition fixed, may fundamentally shape the information environment in ways that foster/mitigate populism and polarization. |
| JEL: | D83 D85 L83 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20729 |
| By: | Becko, John; Grossman, Gene M.; Helpman, Elhanan |
| Abstract: | As geopolitical tensions intensify, great powers often turn to trade policy to influence international alignment. We examine the optimal design of tariffs in a world where large countries care not only about economic welfare but also about the political allegiance of smaller states. We consider both a unipolar setting, where a single hegemon uses preferential trade agreements to attract partners, and a bipolar world, where two great powers compete for influence. In both scenarios, we derive optimal tariffs that balance terms-of-trade considerations with strategic incentives to encourage political alignment. We find that when geopolitical concerns are active, the optimal tari¤ exceeds the classic Mill-Bickerdike level. In a bipolar world, optimal tariffs reflect both economic and political rivalry, and may be strategic complements or substitutes. A calibration exercise using U.N. voting patterns, an estimate of the cost of buying votes in the U.N., and military spending suggests that geopolitical motives can significantly amplify protectionist pressures and that the emergence of a second great power can contribute to a retreat from globalization. |
| JEL: | F13 F52 F53 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20571 |
| By: | Martinez-Miera, David; Sunyer, Carlos |
| Abstract: | This paper provides empirical evidence on the negative effects of political polarization on human capital allocation and hospital outcomes. Levering Spain’s centralized rank-based system for allocating recently graduated doctors to hospitals, we obtain (i) a precise measure of each doctor’s quality and (ii) their work-location choices. Exploiting a plausibly exogenous increase in political polarization in a Spanish region, we find that polarization reduces the average quality of incoming doctors, as higher-ranked candidates become less likely to select positions in the affected region. Examining the underlying mechanisms, we find evidence consistent with conflict avoidance rather than ideological sorting. Consistent with the documented decrease in doctors’ quality, we document an increase in risk-adjusted in-hospital mortality rates. Our findings highlight the broader economic and social costs of political polarization, particularly its impact on the distribution of skilled professionals and health. |
| Keywords: | Health |
| JEL: | D72 I12 J24 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20682 |
| By: | Rodríguez-Pose, Andrés; Dijkstra, Lewis; Dorati, Chiara |
| Abstract: | Over the past two decades, support for Eurosceptic parties has climbed from fringe to nearly one third of voters. Promising renewed prosperity through less European integration, these parties imply Euroscepticism is a ‘free lunch.’ Drawing on an original panel of 1, 166 European NUTS 3 regions (2004 2023) and using fixed , random effects, and difference in differences designs, we test how rising Euroscepticism connects with regional economic and demographic outcomes. We track GDP per capita, productivity, employment, and population growth. We find that a region 10 points more Eurosceptic than another could have ended up with GDP per capita roughly 5% lower than the less Eurosceptic region, as the negative economic influence of Euroscepticism compounds across cycles and intensified after the financial and austerity crises. The same applies for productivity and employment. Demographic impacts are smaller but point in the same direction. Even without governing, Eurosceptic support appears to deter investment and raise uncertainty, deepening the very stagnation that fuels discontent. There is no free lunch: political backlash against European integration carries a measurable costs for the regions that embrace it. |
| Keywords: | Economic development; Population growth; European integration; Regions |
| JEL: | F15 D72 R11 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20730 |
| By: | Anderson, Siwan |
| Abstract: | Political institutions have long been dominated by men, and the majority still are. These institutions, in turn, have placed restrictions on the rights and freedoms of women and girls. Progress has been made in the battle for equality, but inequities persist. The first part of this paper discusses the motivations for male leadership to grant women liberties. The second part flips the perspective and considers women's own participation in the political processes that design and uphold their rights. Innovative research in political economy from both of these perspectives continues to grow, and there remain many exciting possibilities for future research. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20361 |
| By: | Khondaker Golam Moazzem; Sami Mohammed |
| Abstract: | This study examines the relationship between institutional structures and governance outcomes, focusing on how constitutional design, political alignment, and electoral systems affect institutional quality across countries. It specifically considers features such as the form of government, the presence and design of bicameral legislatures, party alignment across legislative chambers, and methods of upper house elections. The empirical investigation assesses how these characteristics influence key governance indicators, including control of corruption, government effectiveness, voice and accountability, judicial independence, and government social expenditure. |
| Keywords: | Bicameralism, Governance, Institutional Design, Constitutional Design, Electoral Systems, Legislative Chambers, Political Alignment, Judicial Independence, Government Effectiveness, Corruption Control |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:pdb:pbrief:92 |
| By: | Hünewaldt, Victoria; Weinig, Max |
| Abstract: | We study how newspaper narratives shape public beliefs and policy preferences during a period of high inflation in Germany 2021–2023. We conducted an online survey experiment with a broadly representative sample of 4, 150 respondents, half of them randomly assigned to one of three inflation narrative treatments: 1) pent-up demand, 2) the energy-price crisis, or 3) corporate price gouging. We find strong baseline political polarization in support for inflation-mitigating policies, while respondents broadly agree on the distributional consequences of inflation. Pre-existing individual causal attributions about inflation correlate with inflation inequality beliefs and policy preferences but prove largely resistant to experimental updating, on average. Among right-leaning respondents, however, exposure to inflation narratives substantially increases support for redistributive and regulatory policies, reducing the baseline partisan gap by up to 80%. This effect is concentrated among respondents on the moderate right who identify with the AfD and exhibit low trust in government, suggesting that, when confronted with inflation as an economic problem, government skepticism is channeled into demand for stronger state protection. |
| Keywords: | inflation;public perceptions;polarization;survey experiment |
| JEL: | D63 D72 D83 E31 E60 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:140238 |
| By: | Lint Barrage (Chair of Energy and Climate Economics, ETH Zurich); Gustav Fredriksson (Department of Economics, Trinity College Dublin) |
| Abstract: | What drives voter decisions on carbon pricing? Analyzing Switzerland's 2021 CO2 Act referendum, this paper finds that support was substantially higher in municipalities experiencing unusually warm weather during the voting period. This effect is most robust relative to a recent temperature baseline, consistent with a 'frog in hot water' effect. Opposition was stronger in areas with higher correlates of policy costs, such as car ownership and manufacturing employment. Evidence on long‐run temperature trends is mixed. These findings suggest that future weather anomalies may increase electoral support for carbon pricing. |
| Keywords: | Carbon Pricing Support, Referendum, Temperature Anomalies, Climate Change |
| JEL: | Q4 D7 H2 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:tcd:tcduee:tep1326 |
| By: | Axbard, Sebastian |
| Abstract: | Can the judiciary help root out government corruption? This paper exploits the random assignment of court cases to justices who exhibit varying degrees of strictness to examine how convicting corrupt officials affects local government outcomes in the Philippines. I document that convictions improve the management of local public finances and reduce associated corruption. An exploration of mechanisms suggests that legal deterrence effects contribute to these findings. The results further indicate that convictions are effective at stifling corruption among bureaucrats, but not politicians. Consistent with this heterogeneity, convictions reduce electoral competition and consequently weaken accountability for incumbent politicians. |
| Keywords: | Corruption |
| JEL: | K42 D72 H41 O17 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20413 |
| By: | Morelli, Massimo |
| Abstract: | Policymaking involves both politicians and bureaucratic agencies, and their interaction is regulated by a number of institutional rules. The populists who manage to enter an executive office typically wish to weaken checks and balances, including the bureaucracy. Thus, the consequences of populism for economic policy can be divided in direct consequences and indirect consequences, through the institutional erosion they cause. Moreover, they can be divided in subnational, national, and global consequences. The paper ends with some advocacy of European-level policymaking rather than national policymaking. |
| Keywords: | Populism; Commitment; Trust; Checks and balances; Liberal democracy; Nationalism trap; European taxation |
| JEL: | D70 H56 H73 J68 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20500 |
| By: | Morelli, M.; Petrukhin, D.; Vannoni, M. |
| Abstract: | Populist leaders often campaign against bureaucratic constraints, yet their economic performance may depend on the very institutional environment they inherit. We examine whether bureaucracy moderates the economic costs of populism using two complementary settings: cross-country synthetic-control evidence and a U.S. state-year panel spanning 1929–2023. The cross-country analysis offers suggestive evidence that the output decline following populist takeovers is attenuated in countries with stronger pre-existing bureaucratic institutions, particularly where bureaucracies are more independent. The U.S. state analysis provides sharper, within-country evidence. Leveraging LLM estimates of gubernatorial populism derived from State of the State speeches, we find that populist governors are associated with significantly lower per-capita income in states lacking an independent civil service, while no comparable penalty emerges—and the association is more than off-set—where such protections are in force. Heterogeneity-robust event-study estimates point in the same direction, with the post-entry income decline concentrated in states without civil-service reform. Together, the evidence is consistent with independent bureaucracies acting as a partial buffer against the economic costs of populist governance: the 'swamp' appears to dampen the damage populism would otherwise cause. |
| Date: | 2026–06–18 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2651 |