Alumni Research- Macro Imbalances and Culture

At the “policy portal” VoxEU.org, Macro Policy and Financial Markets alumni (’11) and current University of Munich Ph.D. candidate Sascha Bützer co-wrote a columnabout macroeconomic imbalances and differences in culture in the Eurozone.

Since the advent of the Eurozone sovereign-debt crisis, economic commentators have drawn attention to macroeconomic imbalances within the Eurozone. This column presents evidence on the link between macroeconomic imbalances and differences in culture – or more specifically, interpersonal trust. A conservative estimatation (sic) suggests that a one standard-deviation increase in trust reduces macroeconomic imbalances by about a quarter of a standard deviation. Moreover, differences in interpersonal trust can explain a fifth of the variation in intra-Eurozone imbalances.

This is just one more example of the creative research being done in greater GSE community.

The authors have a working paper on this topic here.

 

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