Entrepreneurship and State Public Policy

Steven Kreft (skreft@indiana.edu) and Elham Mafi-Kreft (emafikre@indiana.edu)

No 2007-03, Working Papers from Indiana University, Kelley School of Business, Department of Business Economics and Public Policy

Abstract: Many state and local governments have focused on enacting policies to promote entrepreneurship in an effort to enhance economic growth. This paper will test the relationship between entrepreneurial activity and state economic freedom in a Granger causality framework. We build a panel data set of freedom scores and entrepreneurial activity measures within the fifty US states from 1981 to 2003, and our results show that, as a whole, economic freedom causes entrepreneurship. However, we find evidence that once entrepreneurs are in place, they increase the size of government spending, which is contradictory to economic freedom.

Keywords: entrepreneurship; public Policy; economic freedom (search for similar items in EconPapers)
JEL-codes: H1 H4 H7 (search for similar items in EconPapers)
Date: 2007-01
New Economics Papers: this item is included in nep-ent and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:iuk:wpaper:2007-03

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