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Populism and income redistribution

Luciano Campos () and Agustín Casas

Economics Letters, 2020, vol. 186, issue C

Abstract: Populist governments might attempt to favor workers in the short-run by encouraging nominal wage increases. But if the real wage can only be affected by productivity in the long-run, these redistributive attempts would lead to inflation and no real improvement. Based on this widely accepted argument, this paper proposes a simple method to disentangle productivity from, what is here called, populist shocks. In particular, a Bivariate Structural Vector Autoregressive analysis with nominal and real wages, and where long-run restrictions are imposed, can be used to identify these two structural innovations. The methodology is applied to Argentina using data from 1865 to 1974 to identify populist regimes.

Keywords: Macroeconomics of populism; Income redistribution; Structural VARs; Long-run restrictions; Argentina (search for similar items in EconPapers)
JEL-codes: C32 E64 H11 N36 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.econlet.2019.108773

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