Does trust favor macroeconomic stability?

Marc Sangnier

PSE Working Papers from HAL

Abstract: This paper investigates the relationship between trust and macroeconomic volatility. In a cross section of countries, we show that higher trust is associated with lower macroeconomic instability. We use the inherited trust of Americans as an instrumental variable of trust in their origin country to overcome all potential reverse causality concerns. We use changes in inherited trust over the XXth century to show that increasing trust also decreases volatility across time. Thus, trust is shown to be an important determinant of macroeconomic stability both in space and time. Finally, we show that trust reduces investment volatility but not public expenditure volatility.

Keywords: social capital; trust; volatility; macroeconomic stability (search for similar items in EconPapers)
Date: 2009-10
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00575021v1
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://shs.hal.science/halshs-00575021v1/document (application/pdf)

Related works:
Journal Article: Does trust favor macroeconomic stability? (2013)
Working Paper: Does trust favor macroeconomic stability? (2013)
Working Paper: Does trust favor macroeconomic stability? (2013)
Working Paper: Does Trust Favor Macroeconomic Stability? (2012)
Working Paper: Does trust favor macroeconomic stability? (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:psewpa:halshs-00575021

Access Statistics for this paper

More papers in PSE Working Papers from HAL
Bibliographic data for series maintained by CCSD ().