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The dynamics of entrepreneurship: hysteresis, business cycles and government policy

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Abstract

This article estimates two unobserved components models to explore the macrodynamics of entrepreneurship in Spain and the USA. We ask whether entrepreneurship exhibits hysteresis, defined as a macrodynamic structure in which the cyclical component of entrepreneurship has persistent effects on the natural rate of entrepreneurship. We find evidence of hysteresis in Spain, but not the USA, while in Spain business cycle output variations significantly affect future rates of entrepreneurship. The article discusses implications of the findings for the design of entrepreneurship policies.

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Authors and Affiliations

  1. Department of Economics, University of Huelva, Plaza de la Merced, 11, 21002, Huelva, Spain

    Emilio Congregado & Antonio A. Golpe

  2. University of Western Ontario, London, Canada

    Simon C. Parker

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  1. Emilio Congregado
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  2. Antonio A. Golpe
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  3. Simon C. Parker
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Correspondence to Emilio Congregado.

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Congregado, E., Golpe, A.A. & Parker, S.C. The dynamics of entrepreneurship: hysteresis, business cycles and government policy. Empir Econ 43, 1239–1261 (2012). https://doi.org/10.1007/s00181-011-0516-6

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

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