Trust and Growth: A Shaky Relationship

Niclas Berggren (), Mikael Elinder () and Henrik Jordahl ()

No 705, Working Paper Series from Research Institute of Industrial Economics

Abstract: We conduct an extensive robustness analysis of the relationship between trust and growth by investigating a later time period and a bigger sample than in previous studies. In addition to robustness tests that focus on model uncertainty, we systematize the investigation of outlier influence on the results by using the robust estimation technique Least Trimmed Squares. We find that when outliers (especially China) are removed, the trust-growth relationship is no longer robust. On average, the trust coefficient is half as large as in previous findings.

Keywords: Trust; Growth; Robustness; Social Capital; Outliers (search for similar items in EconPapers)
JEL-codes: O40 Z13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-soc
Date: 2007-05-24
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Published in Empirical Economics, 2008, pages 251-274.

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Journal Article: Trust and growth: a shaky relationship (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:hhs:iuiwop:0705

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