This paper analyses the economic consequences of political populism andits effect on future returns of macroeconomic key variables such as for-eign exchange rates, equity indices, inflation, and total reserves includinggold. In particular, we construct a right-wing authoritarian populism in-dicator to identify populist governments during the period from 2000to 2015 and link historical information on elections to financial data,which allows us to observe the phenomena of populism in an interdis-ciplinary context. We then design an empirical analysis to investigatea potential correlation between the indicator and subsequent returns ofmacro-variables. While the precision of the constructed indicator cannotbe evaluated we find some evidence for a negative relationship betweenthe election of populist parties and returns of foreign exchange rates,predominantly in low GDP/capita countries. We confirm this negativecorrelation for returns of reserves, however cannot prove its statistical rel-evancy. The effects of the remaining variables remain unclear and do notpoint towards any systematic interaction with the populism indicator.

Lemmen, J.J.G.
Economics of Management and Organisation
Erasmus School of Economics

Brugner, C. (2020, July 20). The Macroeconomics of Populism; A Quantitative Analysis of the Economic Consequences of Populism in Europe. Economics of Management and Organisation. Retrieved from