Demagogues and the Economic Fragility of Democracie

Dan Bernhardt, Stefan Krasa, Mehdi Shadmehr

Research output: Contribution to journalArticlepeer-review


We investigate the susceptibility of democracies to demagogues, studying tensions between representatives who guard voters’long-run interests and demagogues who cater to voters’ short-run desires. Parties propose consumption and investment. Voters base choices on current-period consumption and valence shocks. Younger/poorer economies and economically disadvantaged voters are attracted to the demagogue’s disinvestment policies, forcing farsighted representatives to mimic them. This electoral competition can destroy democracy: if capital falls below a critical level, a death spiral ensues with capital stocks falling thereafter. We identify when economic development mitigates this risk and characterize how the death-spiral risk declines as capital grows large.

Original languageEnglish (US)
Pages (from-to)331-3366
Number of pages3036
JournalAmerican Economic Review
Issue number10
StatePublished - Oct 2022

ASJC Scopus subject areas

  • Economics and Econometrics


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