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Trust and Growth: A Shaky Relationship


  • Berggren, Niclas

    () (The Ratio Institute)

  • Elinder, Mikael

    () (Uppsala University)

  • Jordahl, Henrik

    () (Research Institute of Industrial Economics (IFN))


We conduct an extensive robustness analysis of the relationship between trust and growth by investigating a later time period and a bigger sample than in previous studies. In addition to robustness tests that focus on model uncertainty, we systematize the investigation of outlier influence on the results by using the robust estimation technique Least Trimmed Squares. We find that when outliers (especially China) are removed, the trust-growth relationship is no longer robust. On average, the trust coefficient is half as large as in previous findings.

Suggested Citation

  • Berggren, Niclas & Elinder, Mikael & Jordahl, Henrik, 2007. "Trust and Growth: A Shaky Relationship," Working Paper Series 705, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0705

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    More about this item


    Trust; Growth; Robustness; Social Capital; Outliers;

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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