Money, institutions, and the rules that bind governments.

This study examines whether dollarization can mitigate the negative macroeconomic impact of populist policies. We initially consider this question using a cross-country dataset that includes many countries. The results from System Generalized Method of Moments (GMM) and staggered Difference-in-Differences (DiD) estimation point to dollarization’s mitigating effect on populist policies. However, some complications in the data induce noise and make our estimates less precise. As a follow-up, we present a series of theoretical and empirical approaches to test our hypothesis within a case study comparing Argentina and Ecuador. Both countries adopted similar populist policies almost simultaneously under different currency regimes: the former with its own currency and the latter having the dollar as legal tender. These results consistently suggest that the adverse macroeconomic effects of populism are less severe under official dollarization, highlighting an important potential benefit of this currency regime for countries that are incapable of establishing and/or maintaining their central bank independence.

We study the institutional impact 21st-century left-leaning populist regimes have in Latin America. Looking at the iconic left-leaning populist regimes in Argentina, Bolivia, Ecuador, Nicaragua, and Venezuela, we find that these types of populist regimes impose a significant deterioration on the liberal-democracy institutional quality of their countries. The institutional cost is significant and long-lasting, and our synthetic counterfactual suggests that liberal democratic institutions would have improved if not for these populist regimes.

Rafael Correa's presidency in Ecuador (2007 – 2017) exemplifies left-leaning populist regimes in Latin America. However, there is a key difference: Ecuador is a dollarized economy. This removes the possibility of fiscal dominance over monetary policy as is common in populist regimes. This paper studies how dollarization constraints a populist leader. We discuss the incentives of a budget constraint immune to monetization and the failed attempt to launch a national digital currency.

We provide an initial assessment of the Federal Reserve's policy response to the COVID‐19 contraction. We briefly review the historical episode and consider the standard textbook treatment of a pandemic on the macroeconomy. We summarize and then evaluate the Fed's monetary and emergency lending policies through the end of 2020. We credit the Fed with promoting monetary stability while maintaining that it could have done more. We argue that the Fed could have achieved stability without employing its emergency lending facilities. Although some facilities likely helped to promote general liquidity, others were primarily intended to allocate credit, which blurs the line between monetary and fiscal policy. These credit allocation facilities were unwarranted and unwise.

This paper studies the relationship between mass immigration in Argentina and the rise of Juan D. Peron (the iconic Argentine populist leader) in the mid-20th century. We find no evidence suggesting that mass immigration to Argentina from 1876 through 1925 explains Peronism directly or indirectly, such as through a reaction to immigrants or their descendants. Instead, a weak institutional framework and domestic conditions independent of immigrants’ role in Argentine economics and society explain Peronism's rise.