In a rising number of countries, populist parties participate in coalition governments. While there exists a consensus that populism is incompatible with core tenets of liberal democracy on a conceptual level, we know much less about whether or not the participation of populist parties in government constitutes a threat to liberal democracy in practice. We study the impact of populist parties in coalition governments using a novel dataset of more than 2000 laws that were under review at the Austrian Constitutional Court between 1980 and 2021. We provide evidence that the court did not find laws passed by governments that included a populist party unconstitutional more often than those passed by non-populist governments. Our findings indicate that the Austrian Freedom Party did moderate its policy while in office. The results imply that it is necessary to distinguish policy positions in party manifestos and party rhetoric from policies actually implemented by governments.