Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/280902 
Authors: 
Year of Publication: 
2024
Series/Report no.: 
Hamburg Discussion Papers in International Economics No. 14
Publisher: 
University of Hamburg, Department of Economics, Senior Lecturer in International Economics, Hamburg
Abstract: 
This paper analyzes the intertemporal variation of trust on economic growth. Constructing a unique global country panel dataset and applying a system-generalized method of moments (SYSGMM) estimation approach to a sample of 75 market economies over a 40-year time span (1980-2019), this paper finds evidence of a causal curvilinear (inverted U-shape) relationship between trust and growth. This relationship corroborates earlier panel data results but challenges findings that posit a general positive relationship between trust and growth. Only a minority of global economies can attain a position close to or above the optimum threshold for trust and growth. Most economies, in fact, fall well below that threshold, and for them, it is incumbent upon their policymakers to consider trust-building measures in order to achieve higher growth. In countries that are close to the optimum threshold, however, such policies can likely be neglected. In fact, in countries where trust levels exceed the optimum, an increase in trust might even hamper growth.
Subjects: 
Trust
Growth
Intertemporal Variation
Panel Analysis
Curvilinear (inverted U-shape) Relationship
Causality
JEL: 
C33
O43
O47
O50
Z13
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.