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

30 Pages Posted: 29 Mar 2009

See all articles by Emilio Congregado

Emilio Congregado

University of Huelva

Antonio Golpe

Universidad de Huelva

Simon C. Parker

University of Western Ontario; Durham University - Department of Economics and Finance; IZA Institute of Labor Economics

Date Written: March 27, 2009

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 business cycle 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.

Keywords: Hysteresis, Unobserved components model, Time Series models, Business cycles, Self-employment, Entrepreneurship

JEL Classification: C32, J23, M13

Suggested Citation

Congregado, Emilio and Golpe, Antonio and Parker, Simon C., The Dynamics of Entrepreneurship: Hysteresis, Business Cycles and Government Policy (March 27, 2009). Available at SSRN: https://ssrn.com/abstract=1369282 or http://dx.doi.org/10.2139/ssrn.1369282

Emilio Congregado (Contact Author)

University of Huelva ( email )

Departament of Economics
Plaza de la Merced, 11
Huelva, Huelva 21002
Spain

HOME PAGE: http://www.uhu.es/emilio.congregado

Antonio Golpe

Universidad de Huelva ( email )

Huelva
Spain
+34959217828 (Phone)
+34959217828 (Fax)

Simon C. Parker

University of Western Ontario ( email )

1151 Richmond Street
Suite 2
London, Ontario N6A 5B8
Canada

Durham University - Department of Economics and Finance ( email )

23/26 Old Elvet
Durham DH1 3HY
United Kingdom
+44 191 3747271 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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