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This paper challenges widespread assumptions in trust research according to which trust and conflict are opposing terms or where trust is generally seen as a value. Rather, it argues that trust is only valuable if properly justified, and it places such justifications in contexts of social and political conflict. For these purposes, the paper suggests a distinction between a general concept and various conceptions of trust, and it defines the concept as a four-place one. With regard to the justification of trust, a distinction between internal and full justification is introduced, and the justification of trust is linked to relations of justification between trusters and trusted. Finally, trust in conflict(s) emerges were such relations exist among the parties of a conflict, often by way of institutional mediation.
The paper looks at the determinants of fiscal adjustments as reflected in the primary surplus of countries. Our conjecture is that governments will usually find it more attractive to pursue fiscal adjustments in a situation of relatively high growth, but based on a simple stylized model of government behavior the expectation is that mainly high trust governments will be in a position to defer consolidation to years with higher growth. Overall, our analysis of a panel of European countries provides support for this expectation. The difference in fiscal policies depending on government trust levels may help explaining why better governed countries have been found to have less severe business cycles. It suggests that trust and credibility play an important role not only in monetary policy, but also in fiscal policy.