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Entrepreneurship and unemployment: a nonlinear bidirectional causality

  • Joao Ricardo Faria
  • Juan Carlos Cuestas
  • Estefania Mourelle

This paper tests the view that the relation between unemployment and entrepreneurship is dynamic and possibly nonlinear. It performs Granger-causality tests and STAR-EXT estimation to assess the causality direction and the nonlinear nature of the relation for a set of OECD countries. The results reveal a bidirectional and nonlinear relation between business creation and changes in unemployment.

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File URL: http://www.ntu.ac.uk/research/document_uploads/85416.pdf
File Function: First version, 2008
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Paper provided by Nottingham Trent University, Nottingham Business School, Economics Division in its series Working Papers with number 2008/6.

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Date of creation: Jun 2008
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Handle: RePEc:nbs:wpaper:2008/6
Contact details of provider: Web page: http://www.ntu.ac.uk/nbs

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  1. repec:dgr:uvatin:0000032 is not listed on IDEAS
  2. Faria, João Ricardo & Cuestas, Juan Carlos & Gil-Alana, Luis A., 2009. "Unemployment and entrepreneurship: A cyclical relation?," Economics Letters, Elsevier, vol. 105(3), pages 318-320, December.
  3. Serena Ng & Pierre Perron, 1997. "Lag Length Selection and the Construction of Unit Root Tests with Good Size and Power," Boston College Working Papers in Economics 369, Boston College Department of Economics, revised 01 Sep 2000.
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  7. Luis Eduardo Arango & Andrés González, 1998. "Some Evidence Of Smooth Transition Nonlinearity In Colombian Inflation," BORRADORES DE ECONOMIA 003515, BANCO DE LA REPÚBLICA.
  8. David B. Audretsch & Werner Boente & Jagannadha Pawan Tamvada, 2007. "Religion and Entrepreneurship," Jena Economic Research Papers 2007-075, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  9. Highfield, Richard & Smiley, Robert, 1987. "New business starts and economic activity : An empirical investigation," International Journal of Industrial Organization, Elsevier, vol. 5(1), pages 51-66, March.
  10. P.D. Koellinger & A.R. Thurik, 0000. "Entrepreneurship and the Business Cycle," Tinbergen Institute Discussion Papers 09-032/3, Tinbergen Institute, revised 30 Sep 2009.
  11. José Cancelo & Estefanía Mourelle, 2005. "Modeling Cyclical Asymmetries in European Imports," International Advances in Economic Research, International Atlantic Economic Society, vol. 11(2), pages 135-147, May.
  12. Hannu Tervo, 2006. "Regional unemployment, self-employment and family background," Applied Economics, Taylor & Francis Journals, vol. 38(9), pages 1055-1062.
  13. Rui Baptista & Roy Thurik, 2004. "The Relationship between Entrepreneurship and Unemployment: is Portugal an Outlier?," Papers on Entrepreneurship, Growth and Public Policy 2004-40, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  14. Hamilton, James D, 1989. "A New Approach to the Economic Analysis of Nonstationary Time Series and the Business Cycle," Econometrica, Econometric Society, vol. 57(2), pages 357-84, March.
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  17. repec:cup:cbooks:9780521828130 is not listed on IDEAS
  18. Nadir Ocal & Denise R. Osborn, 2000. "Business cycle non-linearities in UK consumption and production," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(1), pages 27-43.
  19. Prachowny, Martin F J, 1993. "Okun's Law: Theoretical Foundations and Revised Estimates," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 331-36, May.
  20. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
  21. David B. Audretsch & A. Roy Thurik, 2000. "Capitalism and democracy in the 21st Century: from the managed to the entrepreneurial economy," Journal of Evolutionary Economics, Springer, vol. 10(1), pages 17-34.
  22. John Sutton, 1997. "Gibrat's Legacy," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 40-59, March.
  23. Dijk, Dick van & Franses, Philip Hans, 1999. "Modeling Multiple Regimes in the Business Cycle," Macroeconomic Dynamics, Cambridge University Press, vol. 3(03), pages 311-340, September.
  24. P.D. Koellinger & A.R. Thurik, 0000. "Entrepreneurship and the Business Cycle," Tinbergen Institute Discussion Papers 09-032/3, Tinbergen Institute, revised 30 Sep 2009.
  25. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
  26. David Audretsch & Roy Thurik, 2004. "A Model of the Entrepreneurial Economy," Papers on Entrepreneurship, Growth and Public Policy 2004-12, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  27. Cressy, Robert, 2000. "Credit rationing or entrepreneurial risk aversion? An alternative explanation for the Evans and Jovanovic finding," Economics Letters, Elsevier, vol. 66(2), pages 235-240, February.
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