Social Conflict and Populist Policies in Latin America

Jeffrey D. Sachs

NBER Working Paper No. 2897
Issued in March 1989
NBER Program(s):   ITI   IFM

The central hypothesis of this paper is that high income inequality in Latin America contributes to intense political pressures for macroeconomic policies to raise the incomes of lower income groups, which in turn contributes to bad policy choices and weak economic performance. The paper looks in detail at one common type of policy failure: the populist policy cycle. This particular type of Latin American policymaking, characterized by overly expansionary macroeconomic policies which lead to high inflation and severe balance of payments crises, has been repeated so often, and with such common characteristics, that it plainly reveals the linkages from social conflict to poor economic performance.

(345 K)

Published: Labor Relations and Economic Performance, R. Brunetta and C. Dell-Aringa (eds) Macmillan Press, 1989

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