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The Dynamics of Entrepreneurship: Hysteresis, Business Cycles and Government Policy

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Author Info
Congregado, Emilio () (University of Huelva)
Golpe, Antonio A. () (University of Huelva)
Parker, Simon C. () (University of Western Ontario)

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Abstract

This paper estimates an unobserved components model to explore the macro dynamics of entrepreneurship in Spain and the US. We ask whether entrepreneurship exhibits hysteresis, defined as a macro dynamic structure in which cyclical fluctuations have persistent effects on the natural rate of entrepreneurship. We find evidence of hysteresis in Spain, but not the US, while in both countries business cycle output variations significantly affect future rates of entrepreneurship. The article discusses implications of the findings for the design of entrepreneurship policies.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4093.

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Length: 32 pages
Date of creation: Mar 2009
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Handle: RePEc:iza:izadps:dp4093

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Related research
Keywords: hysteresis; unobserved components model; time series models; business cycles; self-employment; entrepreneurship;

Find related papers by JEL classification:
C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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References listed on IDEAS
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