Economic freedom and veto players jointly affect entrepreneurship

Jacob Lihn and Christian Bjørnskov

Journal of Entrepreneurship and Public Policy, 2017, vol. 6, issue 3, 340-358

Abstract: Purpose - The purpose of this paper is to explore how the strength of political veto players affects the long-run credibility of economic institutions and how they jointly affect entrepreneurial activity. Design/methodology/approach - The authors employ an annual panel covering 30 OECD countries from 1993 to 2011. Findings - An error correction model identifies a positive and significant short-run effect on self-employment from large government spending at low levels of veto player strength. A static model conversely indicates that smaller government spending is positively associated with entrepreneurship at lower levels of veto player strength in the long run. Originality/value - The authors are the first to explore the interaction of economic and political institutions in the development of entrepreneurship.

Keywords: Entrepreneurship; Economic freedom; Veto institutions; M13; O31; O50 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jepppp:jepp-d-17-00007

DOI: 10.1108/JEPP-D-17-00007

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