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A replication of "Inherited Trust and Growth"

Author

Listed:
  • Christoph Eder

    (Johannes Kepler University Linz)

Abstract

Algan and Cahuc (AER, 2010) find that inherited trust has a large impact on GDP per capita. I show that their estimates are possibly biased due to a difference between the lag structure of inherited trust and initial income in their econometric specification. The robustness checks in Algan and Cahuc (2010) potentially eliminate this bias, but suffer from data problems and a missing constant. When these problems are solved, the results do not confirm the main findings anymore, which suggests that the endogeneity issue might be serious. I then re-estimate their main specification with a consistent lag structure but fail to find a statistically or economically significant effect of trust on GDP per capita.

Suggested Citation

  • Christoph Eder, 2018. "A replication of "Inherited Trust and Growth"," Economics Bulletin, AccessEcon, vol. 38(1), pages 574-582.
    • Handle: RePEc:ebl:ecbull:eb-17-00431
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2018/Volume38/EB-18-V38-I1-P55.pdf
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    References listed on IDEAS

    as
    1. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1251-1288.
    2. Yann Algan & Pierre Cahuc, 2010. "Inherited Trust and Growth," American Economic Review, American Economic Association, vol. 100(5), pages 2060-2092, December.
    3. Guido Tabellini, 2010. "Culture and Institutions: Economic Development in the Regions of Europe," Journal of the European Economic Association, European Economic Association, vol. 8(4), pages 677-716, June.
    4. repec:spo:wpmain:info:hdl:2441/432sbils8u9t7qa99cii5psht1 is not listed on IDEAS
    5. Jutta Bolt & Jan Luiten Zanden, 2014. "The Maddison Project: collaborative research on historical national accounts," Economic History Review, Economic History Society, vol. 67(3), pages 627-651, August.
    6. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
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    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Z1 - Other Special Topics - - Cultural Economics

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