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Extreme Events, Entrepreneurial Start-Ups, and Innovation: Theoretical Conjectures

Thomas Gries and Wim Naudé

No 13835, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In light of the COVID-19 pandemic, we scrutinize what has been established in the literature on whether entrepreneurship can cause and resolve extreme events, the immediate and long-run impacts of extreme events on entrepreneurship, and whether extreme events can positively impact (some) entrepreneurship and innovation. Based on this, we propose a partial equilibrium model to provide several conjectures on the impact of COVID-19 on entrepreneurship and derive policy recommendations for recovery. Our model's comparative statics shows that entrepreneurship recovery will benefit from aggregate demand-side support measures, combined with direct subsidies for start-ups, firms' revenue losses, and loan liabilities, as well as from actions that promote income redistribution.

Keywords: entrepreneurship; innovation; COVID-19; extreme events; development (search for similar items in EconPapers)
JEL-codes: I18 L26 L53 M13 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2020-11
New Economics Papers: this item is included in nep-cse, nep-ent, nep-ino and nep-sbm
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