The relationship among entrepreneurial activity, business cycles and economic openness

Gerard Scholman, André van Stel and Roy Thurik

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Abstract: We investigate the interplay among entrepreneurial activity, business cycles and unemployment in relation to economic openness. Additionally, we explore to what extent the observation frequency (quarterly versus annual data) influences the estimation results. Following the empirical literature, we estimate a pooled vector autoregression (VAR) model with fixed effects for the three macroeconomic variables. Using both quarterly and annual data for 19 OECD countries for the period 1998–2007, we observe that over the short term (after one quarter), a country's entrepreneurial activity is stimulated when its business cycle lags behind the world business cycle, whereas over the medium term (after 1 to 2 years), entrepreneurial activity is stimulated when its business cycle leads the world business cycle. This pattern suggests that a country's business cycle position relative to the world cycle creates different types of entrepreneurial opportunities depending on the time horizon considered. These results apply only to economies that are relatively open, which suggests that economic openness plays a role in generating entrepreneurial opportunities related to a country's cyclical performance.

Keywords: Entrepreneurship; Self-employment; Unemployment; Business cycle; World trade; Open economies (search for similar items in EconPapers)
Date: 2015-06
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Citations: View citations in EconPapers (5)

Published in International Entrepreneurship and Management Journal, 2015, 11 (2), pp.307-319. ⟨10.1007/s11365-014-0340-5⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02013766

DOI: 10.1007/s11365-014-0340-5

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