The rise of populism challenges numerous Western democracies and their institutions. In this round-up, we examine economic and societal conditions that are driving forces behind populism. We focus on five domains that are closely interlinked with populist support: globalization, financial crises, migration, inequality, and social mobility. Each domain offers unique insights into how societal shifts, economic disruptions, and perceived injustices can fuel anti-establishment sentiments. As these factors collectively shape the political landscape, understanding their interplay becomes crucial in devising strategies to sustain and strengthen the stability of democracies and institutions.
Over the past 20 years, China has granted a conspicuous amount of loans to African countries. New loan data show that compared to Western multilateral loans, Chinese loans have relatively high interest rates and shorter maturities, tend to be highly collateralized, and are volatile over time. Thus, Western loans are generally more likely to be in the economic interest of the borrowing country. Furthermore, Chinese loans are focused on resource-rich countries that undertake fewer anti-corruption efforts, so local policymakers have more opportunities to feather their own nest. Finally, unlike Western loans, Chinese loans are not tied to any economic policy conditions. It seems worth considering for Western lenders to reduce the number and intensity of loan conditions to respect the sovereignty of the borrowing countries.
In 2020, there were simultaneous increases in the number of private persons participating on the stock market as well as in the number of employees working from home. Indeed, working from home is a robust determinant of stock ownership and partially explains the increase in 2020, with households without children benefiting the most in this manner. Furthermore, the effect of working from home on stock ownership is largest for low-income earners. Thus, working more from home has complex distributional consequences: It tends to expand the stock owner base by, in a broader sense, decreasing the stock market participation cost. While economic policy should not mandate working from home for the sole purpose of increasing stock ownership, it can facilitate stock market participation in other ways, such as by improving financial education.
While there is a broad consensus in the literature that stock ownership is associated with individual characteristics, such as wealth, income, risk preferences, and financial literacy, less is known about the dynamics of stock market participation (SMP). Major fluctuations in SMP are oftentimes related to political events, economic shocks, and technological disruptions. We discuss the literature that investigates some of these shocks, as well as personal life circumstances that determine SMP across various demographic groups. Consolidating the literature allows us to identify systematic drivers into and out of stock ownership, along with its distributional consequences. Major forces behind SMP fluctuations are changes in participation costs and benefits, risk exposure, economic policy uncertainty, income uncertainty, peer effects, and windfall gains.
Reports (German only)
Dass Populismus global auf dem Vormarsch ist, scheinen die Wahlen in Argentinien und der Schweiz jüngst zu bestätigen. Doch es gibt auch andere Tendenzen, die Hoffnung machen: In Polen hat sich die Wählerschaft mehrheitlich gegen die rechtspopulistische Regierungspartei PiS ausgesprochen. Wie ist der weltweite Vormarsch des Populismus zu erklären? Vor allem die ökonomischen Ursachen sind mittlerweile gut erforscht. Kennt man erstmal die Ursachen, kann man sie in der Regel bekämpfen.