The purpose of this paper is to explore how the strength of political veto players affects the long-run credibility of economic institutions and how they jointly affect entrepreneurial activity.
The authors employ an annual panel covering 30 OECD countries from 1993 to 2011.
An error correction model identifies a positive and significant short-run effect on self-employment from large government spending at low levels of veto player strength. A static model conversely indicates that smaller government spending is positively associated with entrepreneurship at lower levels of veto player strength in the long run.
The authors are the first to explore the interaction of economic and political institutions in the development of entrepreneurship.
Lihn, J. and Bjørnskov, C. (2017), "Economic freedom and veto players jointly affect entrepreneurship", Journal of Entrepreneurship and Public Policy, Vol. 6 No. 3, pp. 340-358. https://doi.org/10.1108/JEPP-D-17-00007Download as .RIS
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