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Trust and Economic Growth: Conflicting Results between Cross-Sectional and Panel Analysis

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  • Roth, Felix

    ()
    (University of Göttingen)

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    Abstract

    This paper examines the relationship between trust and economic growth. With the help of panel data I conclude that economic growth is negatively related to an increase in trust. My result is contrary to works taking a cross section design in which trust is positively related to growth. The relationship is tested in the context of EU countries, OECD countries, transition countries and developing countries. Interpersonal trust and systemic trust is differentiated.

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    Bibliographic Info

    Paper provided by The Ratio Institute in its series Ratio Working Papers with number 102.

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    Length: 22 pages
    Date of creation: 30 Aug 2006
    Date of revision: 15 Nov 2006
    Publication status: Forthcoming in Kyklos.
    Handle: RePEc:hhs:ratioi:0102

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    Keywords: Social Capital; Trust; Economic Growth; Panel Analyis;

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    1. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
    2. Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment: Updates and Implications," CID Working Papers 42, Center for International Development at Harvard University.
    3. Niclas Berggren & Mikael Elinder & Henrik Jordahl, 2008. "Trust and growth: a shaky relationship," Empirical Economics, Springer, vol. 35(2), pages 251-274, September.
    4. A. B. Atkinson, 1999. "The Economic Consequences of Rolling Back the Welfare State," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011719, December.
    5. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
    6. Joel Sobel, 2002. "Can We Trust Social Capital?," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 139-154, March.
    7. Delhey, Jan & Newton, Kenneth, 2004. "Social trust: global pattern or nordic exceptionalism?," Discussion Papers, Research Unit: Inequality and Social Integration SP I 2004-202, Social Science Research Center Berlin (WZB).
    8. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 811-846, August.
      • Scheinkman, Jose A. & Soutter, Christine L. & Glaeser, Edward Ludwig & Laibson, David I., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
    9. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
    10. Paul F. Whiteley, 2000. "Economic Growth and Social Capital," Political Studies, Political Studies Association, vol. 48(3), pages 443-466, 06.
    11. Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
    12. Stephan Klasen, 2002. "Low Schooling for Girls, Slower Growth for All? Cross-Country Evidence on the Effect of Gender Inequality in Education on Economic Development," World Bank Economic Review, World Bank Group, vol. 16(3), pages 345-373, December.
    13. Sjoerd Beugelsdijk & Henri L.F. de Groot & Anton B.T.M. van Schaik, 2002. "Trust and Economic Growth," Tinbergen Institute Discussion Papers 02-049/3, Tinbergen Institute.
    14. John F. Helliwell, 1996. "Economic Growth and Social Capital in Asia," NBER Working Papers 5470, National Bureau of Economic Research, Inc.
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