| Author(s): |
prof. Roman Horváth Ph.D.,
|
| Type: |
IES Working Papers |
| Year: |
2012 |
| Number: |
9 |
| ISSN / ISBN: |
|
| Published in: |
IES Working Papers 9/2012 |
| Publishing place: |
Prague |
| Keywords: |
trust, economic growth, Bayesian model averaging |
| JEL codes: |
O43, O10, Z13 |
| Suggested Citation: |
Horváth, R. (2012). “Does Trust Promote Growth?” IES Working Paper 09/2012. IES FSV. Charles University. |
| Abstract: |
We examine the effect of generalized trust on long-term economic growth. Unlike in previous studies, we use Bayesian model averaging to deal rigorously with model uncertainty and attendant omitted variable bias. In addition, we address endogeneity and assess whether the effect of trust on growth is causal. Examining more than forty regressors for nearly fifty countries, we show that trust exerts a positive effect on long-term growth and, based on the posterior inclusion probabilities, suggest that trust is an important driver of long-term growth. Our results also show that trust is key for growth in countries with a weak rule of law. |
| Downloadable: |
WP 2012_09_Horvath
|
