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.
Working Paper No. 705
Trust and Growth: A Shaky Relationship
Working Paper
Reference
Berggren, Niclas, Mikael Elinder and Henrik Jordahl (2007). “Trust and Growth: A Shaky Relationship”. IFN Working Paper No. 705. Stockholm: Research Institute of Industrial Economics (IFN).
Berggren, Niclas, Mikael Elinder and Henrik Jordahl (2007). “Trust and Growth: A Shaky Relationship”. IFN Working Paper No. 705. Stockholm: Research Institute of Industrial Economics (IFN).
Authors
Niclas Berggren, Mikael Elinder ,
Henrik Jordahl