The economic model of populism is an approach to economics that emphasizes growth, income distribution and the risk of inflation, deficit finance, external constraints and the reaction of economic agents to aggressive nonmarket policies. This occurs when governments seek to spur economic growth by the expansion of domestic demand and redistribution of income. Populism was a common policy that was chosen by many governments in Latin America in the late 20th century. This was due to high-income inequality in Latin America. This then contributed to intense political pressures for macroeconomic policies to raise the incomes of lower income groups, which in turn contributed to bad policy choices and weak economic performance. In Latin America however, the populist policies do ultimately fail and when they did fail it was always at a staggering cost to the very groups that were supposed to be favored. Populism has severe consequences economically and domestically, and there are different policies that are associated with economic populism both structural and institutional factors, which will be explored further.
             Kaufman defines populism as a set of economic policies that are designed to achieve specific political goals. The political goals could vary from politically isolating the rural oligarchy and large-scale domestic industrial elites or mobilizing support within organized labor and lower-middle-class groups. The economic policies that are instigated to attain these gains include; budget deficits, nominal wage increases, price control and exchange rate controls. Interestingly enough, in the case of Latin American Populism, the political goals were not achieved. This was because the economic policies that were put in place to achieve the political aims bore severe consequences. Kaufman outlines the different phases that were carried out with the populist policies. In the first phase, the policymakers are fully vindicated in their d...