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on Entrepreneurship |
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Issue of 2013‒09‒25
three papers chosen by Marcus Dejardin University of Namur and Universite' Catholique de Louvain |
| By: | Ejermo, Olof (CIRCLE, Lund University); Xiao, Jing (CIRCLE, Lund University and Department of Economic History, Lund University, Sweden) |
| Abstract: | We investigate the relationship between the survival performance of new technologybased firms (NTBFs) over the business cycle and compare them against other entrepreneurial firms. Our data comprise the entire population of entrepreneurial firms entering the Swedish economy from 1991 to 2002, which we follow until 2007. Discrete-time duration models are employed to investigate whether the business cycle impacts differently on the survival likelihood of NTBFs vs. other entrepreneurial firms. Our main findings are three. First, NTBFs generally experience a lower hazard rate compared to other entrepreneurial firms. Second, all entrepreneurial firms are sensitive to, and follow a pro-cyclical pattern of survival likelihood over the business cycle. Three, when comparing NTBFs with firms without self-employees we find that NTBFs are more sensitive to business cycle fluctuations |
| Keywords: | new technology-based firms; exit; survival probability; the business cycle; discrete-time duration models; Sweden |
| JEL: | E32 L25 L26 O33 |
| Date: | 2013–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2013_019&r=ent |
| By: | Svaleryd, Helena (Department of Economics) |
| Abstract: | The business cycle is likely to be of importance for self-employment rates. When the economy is growing, business opportunities open up and encourage the set-up of new firms. In downturns, self-employment may be a way to avoid unemployment. The strength of these pull and push factors may depend on the amount of human capital a person has. The findings in this paper show that although the local business cycle is of minor importance for total self-employment rates in Sweden, there are heterogeneous effects across groups. People with higher human capital endowments are more likely to be pulled into self-employment, while those with lower human capital endowments are to a larger extent pushed into self-employment. This pattern is particularly strong for women. |
| Keywords: | Self-employment; local business cycle; panel data |
| JEL: | J21 J24 |
| Date: | 2013–08–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uunewp:2013_015&r=ent |
| By: | Jonathan E. Goldberg |
| Abstract: | I study the effects of credit tightening in an economy with uninsured idiosyncratic investment risk. In the model, entrepreneurs require an equity premium because collateral constraints limit insurance. After collateral constraints tighten, the equity premium and the riskiness of consumption rise and the risk-free interest rate falls. I show that, both immediately after the shock and in the long run, the equity premium and the riskiness of consumption increase more than they would if the risk-free rate were constant. Indeed, the long-run increase in the riskiness of consumption growth is purely a general-equilibrium effect: if the risk-free rate were constant (as in a small open economy), an endogenous decrease in risk-taking by entrepreneurs would, in the long run, completely offset the decrease in their ability to diversify. I also show that the credit shock leads to a decrease in aggregate capital if the elasticity of intertemporal substitution is sufficiently high. Finally, I show that, due to a general-equilibrium effect, there is no "overshooting" in the equity premium: in response to a permanent decrease in firms' ability to pledge their future income, the equity premium immediately jumps to its new steady-state level and remains constant thereafter, even as aggregate capital adjusts over time. However, if idiosyncratic uncertainty is sufficiently low, credit tightening has no short- or long-run effects on aggregate capital, the equity premium, or the riskiness of consumption. Thus my paper highlights how investment risk affects the economy's response to a credit crunch. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-47&r=ent |