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Entrepreneurship and State Public Policy

Author

Listed:
  • Steven F. Kreft

    (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)

  • Elham Mafi-Kreft

    (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)

Abstract

Many state and local governments have focused on enacting policies to promote entrepreneurship in an effort to enhance economic growth. This paper will test the relationship between entrepreneurial activity and state economic freedom in a Granger causality framework. We build a panel data set of freedom scores and entrepreneurial activity measures within the fifty US states from 1981 to 2003, and our results show that, as a whole, economic freedom causes entrepreneurship. However, we find evidence that once entrepreneurs are in place, they increase the size of government spending, which is contradictory to economic freedom.

Suggested Citation

  • Steven F. Kreft & Elham Mafi-Kreft, 2007. "Entrepreneurship and State Public Policy," Working Papers 2007-03, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    • Handle: RePEc:iuk:wpaper:2007-03
    as

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    File URL: http://kelley.iu.edu/riharbau/RePEc/iuk/wpaper/bepp2007-03-kreft-mafi.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H4 - Public Economics - - Publicly Provided Goods
    • H1 - Public Economics - - Structure and Scope of Government

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