Deteriorating fiscal outlooks have contributed substantially to the recent rise in long-term government bond yields across advanced economies.
A substantial portion of the increase in yields is caused by the increased supply of government bonds, even after controlling for inflation and sovereign default risk.
Economic insecurity is a more important driver of the recent rise of populist movements than voters’ concerns about national culture and identity.
Populist movements that achieve electoral success lead to a substantial slowdown in economic growth.
Some degree of potentially growth-constraining policies on trade, investment and/or migration is necessary to limit the further rise of populist movements in Europe.
