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

Authors

Emilio Congregado, University of Huelva
Antonio A. Golpe, University of Huelva
Simon C. Parker, University of Western Ontario

Document Type

Article

Publication Date

12-2012

Volume

43

Issue

3

Journal

Empirical Economics

First Page

1239

URL with Digital Object Identifier

https://doi.org/10.1007/s00181-011-0516-6

Last Page

1261

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.

Notes

This is the author-approved version of an article published in Empirical Economics. The final published version can be found at

https://doi.org/10.1007/s00181-011-0516-6