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AbstractEconomic populism was once recognized as a paradigmatic understanding of the boom‐and‐bust cycles of Latin America. By now, the concept has lost its analytical strength and academic attractiveness. Nevertheless, policy analysts cannot neglect the supply side analysis of contemporary populism, that is, what populists actually do once elected into government. Adopting and operationalizing the ideational definition of populism, the article identifies three major consequences of populist incumbency: (1) the inclination of populists to embark on redistributive policies favoring "our" people against "others," (2) their critical attitude toward autonomous organizations, professionals, and institutions, and (3) their antagonistic relationship with the competitive market mechanism. The article demonstrates that populism is no longer about myopic and irresponsible policies; instead, populists tend to disregard the institutional constraints of economic decision making.

In the wake of the financial and economic crisis Keynesian macroeconomic management has once again come into the spotlight. The following article takes a critical look at the practice of expansionary fiscal policy in the EU's old member states between 1980 and 2005 in order to answer the question whether fiscal stimulus can be a successful response to the current crisis in both the short and the long run.

Hungary is one of the worst-hit countries of the current financial crisis in Central and Eastern Europe. The deteriorating economic performance of the country is, however, not a recent phenomenon. A relatively high ratio of redistribution, a high and persistent public deficit and accelerated indebtedness characterised the country not just in the last couple of years but also well before the transformation, which also continued in the postsocialist years. The gradualist success of the country - which dates back to at least 1968 - in the field of liberalisation, marketisation and privatisation was accompanied by a constant overspending in the general government. The paper attempts to explore the reasons behind policymakers' impotence to reform public finances. By providing a path-dependent explanation, it argues that both communist and postcommunist governments used the general budget as a buffer to compensate losers of economic reforms, especially microeconomic restructuring. The ever-widening circle of net benefiters of welfare provisions paid from the general budget, however, has made it simply unrealistic to implement sizeable fiscal adjustment, putting the country onto a deteriorating path of economic development.

The short-term effects of fiscal consolidation have attracted an increasing attention from both the academia and policy makers in the recent years. Authors in the literature on non-Keynesian effects usually put the emphasis on the need for the devaluation of the national currency, the accommodating reaction of the monetary authority and the favourable international economic conditions as the necessary accompanying tools of fiscal consolidation, in order to realise short-term expansionary effects. Some also add the necessity of large-scale adjustment; while others support the view that a high and increasing debt ratio or increasing government spending, by triggering an unavoidable adjustment, is the key to experiencing short-term expansionary effects. The composition of adjustment also became a crucial explanation for non-Keynesian effects. However, as the following critical assessment of the literature on expansionary fiscal consolidations will reveal, institutional conditions, such as the importance of the depth of financial intermediation and the influencing role of labour market structure, can prove to be crucial in the occurrence of the desired expansionary short-term effects.

This article assesses progress in the economics-centred literature on populism along three key themes and develops a conceptual framework to better understand the phenomenon. On the demand side (t − 1), economics research identifies the effect of an exogenous economic shock on a marginalised segment of society and works with the economic voting hypothesis. On the supply side of populists in power (t), in the literature, populist rule is typically associated with unsustainable expansionary fiscal and monetary policies and with trade protectionism. At t  + 1, by using rational and biased belief assumptions, economists provide implicit inputs for a seemingly paradoxical question: why is a populist re-elected even if most populist policies assumably end up in Pareto inferior outcomes? This article summarises and criticises the relevant economic literature and shows that not only political science, but economics scholarship is instrumental for studying populism at all three stages.