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The impact of trust on reforms

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  • Friedrich Heinemann
  • Benjamin Tanz

Abstract

In a constantly changing economic environment, a country's ability to undertake institutional reforms is crucial to maintain economic growth and to promote the welfare of its citizens. A wide range of determinants for institutional reforms have been identified. However, the impact of trust on reforms has not been fully addressed. We provide theoretical arguments why trust should influence institutional changes and test the relationship empirically. We find a significant positive relation between trust and the success of reforms with regard to government size, the legal system, and deregulation of private businesses and the labor market. Other policy fields are ambiguous.

Suggested Citation

  • Friedrich Heinemann & Benjamin Tanz, 2008. "The impact of trust on reforms," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 11(3), pages 173-185.
  • Handle: RePEc:taf:jpolrf:v:11:y:2008:i:3:p:173-185
    DOI: 10.1080/17487870802405375
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    More about this item

    Keywords

    trust; economic freedom; policy reforms;

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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