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Christoph Eder
''A replication of "Inherited Trust and Growth"''
( 2018, Vol. 38 No.1 )
Algan and Cahuc (AER, 2010) find that inherited trust has a large impact on GDP per capita. I show that their estimates are possibly biased due to a difference between the lag structure of inherited trust and initial income in their econometric specification. The robustness checks in Algan and Cahuc (2010) potentially eliminate this bias, but suffer from data problems and a missing constant. When these problems are solved, the results do not confirm the main findings anymore, which suggests that the endogeneity issue might be serious. I then re-estimate their main specification with a consistent lag structure but fail to find a statistically or economically significant effect of trust on GDP per capita.
Keywords: Economic Growth, Trust, Culture
JEL: O4 - Economic Growth and Aggregate Productivity: General
Z1 - Cultural Economics; Economic Sociology; Economic Anthropology: General
Manuscript Received : Jun 02 2017 Manuscript Accepted : Mar 23 2018

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