Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/79226
Authors: 
Horvath, Roman
Year of Publication: 
2012
Series/Report no.: 
IOS Working Papers 319
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.
Subjects: 
trust
economic growth
Bayesian model averaging
JEL: 
O43
O10
Z13
Document Type: 
Working Paper

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