Demagogues and the Economic Fragility of Democracies?

• 成果类型: Article
• 署名作者: Bernhardt, Dan; Krasa, Stefan; Shadmehr, Mehdi
• 署名单位: University of Illinois System; University of Illinois Chicago; University of Illinois Chicago Hospital; University of Warwick; University of North Carolina; University of North Carolina Chapel Hill; University of North Carolina School of Medicine
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20211125
• 发表日期: 2022
• 页码: 3331-3366
• 关键词: POLITICAL-THEORY; dynamic theory; POLICY; deficits

摘要

We investigate the susceptibility of democracies to demagogues, studying tensions between representatives who guard voters' long-run interests and demagogues who cater to voters' short-run desires. Parties propose consumption and investment. Voters base choices on current-period consumption and valence shocks. Younger/poorer economies and economically disadvantaged voters are attracted to the demagogue's disinvestment policies, forcing farsighted represen-tatives to mimic them. This electoral competition can destroy democ-racy: if capital falls below a critical level, a death spiral ensues with capital stocks falling thereafter. We identify when economic develop-ment mitigates this risk and characterize how the death-spiral risk declines as capital grows large. (JEL D72, E21, E22, E32)