Macroeconomic populism in Chile: Allende and the recession of 1973

Victor I. Espinosa and Viviana Véjar

Revista de Historia Económica / Journal of Iberian and Latin American Economic History, 2025, vol. 43, issue 2, 309-332

Abstract: This paper commemorates the 50th anniversary of the 1973 recession during Salvador Allende’s government by offering a comprehensive analysis of macroeconomic populism. Focusing on the lessons from this historical episode, it is argued that the lax economic policies in 1970 and 1971 triggered the boom of 1971, culminating in a financial crisis in 1972 and an economic recession in 1973. The examination encompasses an evaluation of Chilean macroeconomic populism, delving into the impact of these lax policies on the business cycle. Furthermore, it addresses prevalent misinterpretations of the 1973 recession in the context of recent Latin American events. The paper concludes by extrapolating broader insights from the Chilean experience, offering valuable lessons for shaping effective economic policies in Latin America.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:cup:reveco:v:43:y:2025:i:2:p:309-332_6

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