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Macroeconomic Factors and Swedish Small and Medium-Sized Manufacturing Firm Failure

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Author Info
Salman, A. Khalik (CAFO, Växjö University)
von Friedrichs, Yvonne (CAFO, Växjö University)
Shukur, Ghazi () (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
Abstract

This paper employs a time series cointegration approach to evaluate the relationship between manufacturing firm failure and macroeconomic factors for the Swedish manufacturing sector in the period 1986 – 2006. It uses quarterly data for this period. We found that in long run a firms’ failure is negatively related to the level of industrial activity, money supply, GNP and economic openness rate, and positively related to the real wage. Time series Error Correction Model (ECM) estimates suggest that macroeconomic risk factors impinge on firm failures on the same direction in both the short run and the long run and that adjustment to stabilise the relationship is quite slow.

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Publisher Info
Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 185.

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Length: 25 pages
Date of creation: 26 Aug 2009
Date of revision:
Handle: RePEc:hhs:cesisp:0185

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Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
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Related research
Keywords: firm failure; macroeconomic factors; cointegration analysis; diagnostic tests;

Find related papers by JEL classification:
D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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    Other versions:
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