Working Paper No. 705

Trust and Growth: A Shaky Relationship

Published: May 24, 2007Pages: 19Keywords: Trust; Growth; Robustness; Social Capital; OutliersJEL-codes: O40; Z13

Trust and Growth: A Shaky Relationship Niclas Berggren, Mikael Elinder and Henrik Jordahl


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.

 

Niclas Berggren

Contact

Ph: +46 8 665 4520
niclas.berggren@ifn.se

Henrik Jordahl

Contact

Ph: +46 8 665 4533
Mob: +46 70 938 3858
henrik.jordahl@ifn.se

Mikael Elinder

Contact

Ph: +46 18 471 1565
Mob: +46 70 769 0976
mikael.elinder@ifn.se

An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

Omslag 2017 Institutional Reform for Innovation and Entrepreneurship.jpg

The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.

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