More than 30 years ago, the economists Rudiger Dornbusch (one of my mentors) and Sebastian Edwards wrote a classic paper on what they called “macroeconomic populism”.
Their motivating examples were inflationary outbreaks under left-wing regimes in Latin America, but it seemed clear that the key issue wasn’t left-wing governance per se; it was, instead, what happens when governments engage in magical thinking.
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