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Extreme Events, Entrepreneurial Start-Ups, and Innovation: Theoretical Conjectures

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  • Gries, Thomas

    (University of Paderborn)

  • Naudé, Wim

    (University College Cork)

Abstract

In light of the COVID-19 pandemic, we scrutinize what has been established in the literature on whether entrepreneurship can cause and resolve extreme events, the immediate and long-run impacts of extreme events on entrepreneurship, and whether extreme events can positively impact (some) entrepreneurship and innovation. Based on this, we propose a partial equilibrium model to provide several conjectures on the impact of COVID-19 on entrepreneurship and derive policy recommendations for recovery. Our model's comparative statics shows that entrepreneurship recovery will benefit from aggregate demand-side support measures, combined with direct subsidies for start-ups, firms' revenue losses, and loan liabilities, as well as from actions that promote income redistribution.

Suggested Citation

  • Gries, Thomas & Naudé, Wim, 2020. "Extreme Events, Entrepreneurial Start-Ups, and Innovation: Theoretical Conjectures," IZA Discussion Papers 13835, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp13835
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    References listed on IDEAS

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    More about this item

    Keywords

    entrepreneurship; innovation; COVID-19; extreme events; development;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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