The relationship between entrepreneurial activity, the business cycle and economic openness

André van Stel, Roy Thurik and Gerard Scholman

No H201218, Scales Research Reports from EIM Business and Policy Research

Abstract: We investigate the interplay between entrepreneurial activity, the business cycle and unemployment in relation to the openness of the economy. Also, we explore to what extent the observation frequency (quarterly versus annual data) influences estimation results. Following empirical literature, we estimate a pooled VAR model of the three macro-economic variables. Using both quarterly and annual data for 19 OECD countries over the period 1998-2007, we find that in the short run (after one quarter), a country’s entrepreneurial activity is stimulated when its business cycle is lagging the world’s business cycle, whereas in the medium run (after one to two years), entrepreneurial activity is stimulated when its business cycle is leading the world’s business cycle. This suggests that a country’s business cycle position relative to the world’s cycle creates different types of entrepreneurial opportunities depending on the time horizon considered. These results apply to relatively open economies only which suggests that economic openness plays a role for entrepreneurial opportunities related to a country’s cyclical performance.

Pages: 19 pages
Date: 2014-02-12
New Economics Papers: this item is included in nep-ent and nep-sbm
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eim:papers:h201218

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