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A replication of "Inherited Trust and Growth"

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  • 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
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    References listed on IDEAS

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    3. Yann Algan & Pierre Cahuc, 2010. "Inherited Trust and Growth," American Economic Review, American Economic Association, vol. 100(5), pages 2060-2092, December.
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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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