The Impact of Macroeconomic Variables on Entrepreneurship: Generalized Method of Moments (GMM)

Document Type : Scientific paper

Authors

1 Assistant professor, Department of Administrative and Economic Sciences, Faculty of Humanities, Gonbad Kavous University, Gonbad Kavous, Iran

2 MA student, Department of Administrative and Economic Sciences, Faculty of Humanities, Gonbad Kavous University, Gonbad Kavous, Iran

Abstract

Entrepreneurship is one of the key factors in the process of economic growth of countries and is essential for the stability of economic growth in today's dynamic world. Therefore, the development of entrepreneurial activities is a necessity for developing and developed countries. However, patterns of entrepreneurial activity are unevenly distributed. While some regions have seen extraordinary growth in entrepreneurial activity, others have shown a decline in productive entrepreneurial activity. In this regard, the main purpose of this article is to study the short- and long-term effects of macroeconomic variables (tax rate, unemployment rate, inflation rate, foreign investment, access to funds, start-up costs) on entrepreneurship in a group of efficiency-driven countries (30 countries including Iran) and innovation-driven countries (28 countries) using panel data technic and generalized method of moments (GMM) during 2018-2010. The results show the negative effects of tax rates, foreign investment, inflation, and business start-up costs, as well as the positive effects of unemployment and access to financing on entrepreneurial activities in efficiency-driven countries in the short- and long-term. The results also show the negative effects of tax rates, unemployment rates, and business start-up costs, and positive effects of inflation and access to financing, and the lack of foreign investment in innovative countries in the short- and long-term. In addition, due to the macroeconomic stability of selected countries, the impact of these factors is more pronounced in efficiency-oriented countries than in innovation-oriented countries.

Keywords

References

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Macroeconomics Research Letter
Volume 15, Issue 30
January 2021
Pages 34-61

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History

  • Receive Date: 14 December 2019
  • Revise Date: 25 November 2020
  • Accept Date: 01 January 2021

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