THE ECONOMIC EFFECT OF POPULIST RHETORIC IN HUNGARY
THE ECONOMIC EFFECT OF POPULIST RHETORIC IN HUNGARY

Summary/Abstract: The Hungarian government has been widely associated with populist rhetoric in the literature. Its length and uninterrupted government since 2010 create a unique opportunity to study in detail the effects of this kind of rhetoric on its macroeconomic performance. How does Hungary perform under a government characterised by populist rhetoric? The study reveals that populism carries a significant economic cost, as GDP at equal purchasing power parity in 2020 is 10.04% lower than a plausible alternative scenario where the current government was not elected, after a period of 10 years. Lack of addressing some persisting problems of the country, such as lack of competitiveness and institutional decay, might be the underlying dynamic in creating lasting damage to the economy. In this paper, we explore this topic using three different, but complementary techniques used to assess causality: Difference-in-Differences, Synthetic Difference-in-Differences, and the Synthetic Control Method.

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