Indication of Economic Populism Through Public Finance Measures: An Empirical Study of the Largest Cities in Czechia and Türkiye

This study applies the novel Mixed Populism Indication approach to examine and compare economic populism in the largest cities of Czechia and Türkiye. Using standard financial measures and their relationship with interest rates, we tracked potential symptoms of economic populism within local government public finance from 2011 to 2021. The pooled panel expansion of our analytical framework verifies the relevance of our method. It also assesses whether broader political or macroeconomic factors could explain the observed relationships. Based on the cointegration and correlation analysis results, we found no pronounced symptoms of populism in either Czechia or Türkiye. However, our results suggest possible populist behaviour in two Turkish cities, in particular Istanbul and Izmir. In these cities, increases in interest rates are associated with higher debt and debt costs, indicating a less restrained fiscal policy approach. This behaviour aligns with definitions of economic populism in the literature, as it prioritises short-term gains over long-term fiscal sustainability. In Czechia, suspicions of populism concern the cities of Prague and Pilsen, though the symptoms are less evident in financial data. Moreover, Czech cities generally take a more cautious fiscal approach, avoiding significant increases in debt costs, which makes signs of populism less discernible.