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

  • Roth, Felix

    ()

    (University of Göttingen)

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    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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    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
    Contact details of provider: Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
    Phone: 08-441 59 00
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    1. 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.
      • Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. Berggren, Niclas & Elinder, Mikael & Jordahl, Henrik, 2007. "Trust and Growth: A Shaky Relationship," Working Paper Series 705, Research Institute of Industrial Economics.
    7. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
    8. 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).
    9. 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, June.
    10. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-63, July.
    11. 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.
    12. John F. Helliwell, 1996. "Economic Growth and Social Capital in Asia," NBER Working Papers 5470, National Bureau of Economic Research, Inc.
    13. Paul F. Whiteley, 2000. "Economic Growth and Social Capital," Political Studies, Political Studies Association, vol. 48(3), pages 443-466, 06.
    14. Joel Sobel, 2002. "Can We Trust Social Capital?," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 139-154, March.
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