On Trust Dynamics of Economic Growth

Shah, Syed Sibghatullah (2019): On Trust Dynamics of Economic Growth.

Abstract

Trust among individuals in society may have various economic and social implications. Though, worldwide data on economic growth rarely consider trust as an ingredient in manipulating economic outcomes. Thus, we include trust instigating from individual, affecting community and state thus, forming trust-based economy. In order to explore the relationship of trust with growth and its benefits implications, this study suggests a model which is validated by Markov process. Consequently, results indicate significant impact of trust on economic growth by achieving convergence in very few iterations in the case of trust-based economy. On the other hand, economy with lowest trust level shows delayed convergence and takes around 4 times more iterations to attain equilibrium. Additionally, socio-economic benefits are more visible in a trust-based economy.

• Item Type: MPRA Paper
• Language: English
• Keywords: Trust, Markov process, Equilibrium, Convergence, Economic Growth
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C15 - Statistical Simulation Methods: General; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C53 - Forecasting and Prediction Methods ; Simulation Methods; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D71 - Social Choice ; Clubs ; Committees ; Associations; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E21 - Consumption ; Saving ; Wealth; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H20 - General; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z10 - General; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z13 - Economic Sociology ; Economic Anthropology ; Social and Economic Stratification

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