High levels of social trust has been linked to both public sector size and long term economic growth, thereby helping … examines if social trust as a background factor also insulates countries against negative effects of public sector size on … insulating effects. Instead we find robust evidence that high trust aggravates the crowding out effects of public sector size on …

-country differences in informal institutions, measured by social trust. We note a number of theoretical mechanisms that could imply that … similar objective problems are more likely to be effectively dealt with in higher-trust societies. A set of panel estimates … and growth problems in low-trust countries. This finding sheds light on the differential market reactions to economic …