Inequality Aversion, Populism, and the Backlash Against Globalization

Lubos Pastor and Pietro Veronesi

No 24900, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Motivated by the recent rise of populism in western democracies, we develop a tractable equilibrium model in which a populist backlash emerges endogenously in a strong economy. In the model, voters dislike inequality, especially the high consumption of "elites." Economic growth exacerbates inequality due to heterogeneity in preferences, which generates heterogeneity in returns on capital. In response to rising inequality, rich-country voters optimally elect a populist promising to end globalization. Equality is a luxury good. Countries with more inequality, higher financial development, and trade deficits are more vulnerable to populism, both in the model and in the data.

JEL-codes: D72 F65 G11 G12 G18 P16 (search for similar items in EconPapers)
Date: 2018-08
New Economics Papers: this item is included in nep-pke and nep-pol
Note: AP IFM ITI POL
References: Add references at CitEc
Citations: View citations in EconPapers (42)

Published as ĽUBOŠ PÁSTOR & PIETRO VERONESI, 2021. "Inequality Aversion, Populism, and the Backlash against Globalization," The Journal of Finance, vol 76(6), pages 2857-2906.

Downloads: (external link)
http://www.nber.org/papers/w24900.pdf (application/pdf)

Related works:
Journal Article: Inequality Aversion, Populism, and the Backlash against Globalization (2021)
Working Paper: Inequality Aversion, Populism, and the Backlash Against Globalization (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:24900

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w24900

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().