ABSTRACT
This chapter discusses what populists do once they assume power from two perspectives: the impact of populist governments on the state of democracy, and the corresponding effect on the economy. The operational strategies of populists are limited by the existing constitutional structure, especially the separation of powers. Their operational strategies are also limited by whether they have been elected as the leading party with a ruling majority or as a junior coalition member. The perilous actions of incumbent populists in the political domain are in tandem with similarly disruptive, and in most cases detrimental, consequences for the economy. The debate on how to analyze incumbent government behavior with economic methods was initiated by the work of Downs, among others. The models discussed are by no means exhaustive and are only a first step towards a strategy for identifying the causal impact of populist rule on political and economic phenomena.
