Journal ArticleDOI
An Estimated Model of Entrepreneurial Choice under Liquidity Constraints
David S. Evans,Boyan Jovanovic +1 more
TLDR
The authors show that the data point to liquidity constraints: capital is essential for starting a business, and liquidity constraints tend to exclude those with insufficient funds at their disposal, and a would-be entrepreneur must bear most of the risk inherent in his venture.Abstract:
Is the capital function distinct from the entrepreneurial function in modern economies? Or does a person have to be wealthy before he or she can start a business? Knight and Schumpeter held different views on the answer to this question. Our empirical findings side with Knight: Liquidity constraints bind, and a would-be entrepreneur must bear most of the risk inherent in his venture. The reasoning is roughly this: The data show that wealthier people are more inclined to become entrepreneurs. In principle, this could be so because the wealthy tend to make better entrepreneurs, but the data reject this explanation. Instead, the data point to liquidity constraints: capital is essential for starting a business, and liquidity constraints tend to exclude those with insufficient funds at their disposal.read more
Citations
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Journal ArticleDOI
On entrepreneurial risk-taking and the macroeconomic effects of financial constraints
TL;DR: The authors studied the effects of tightening financial constraints on macroeconomic performance, entrepreneurial risk-taking, and social mobility in a two-sector heterogeneous agent dynamic general equilibrium model of occupational choice and found substantial gains in output, welfare, and wealth equality associated with credit market improvements.
El emprendimiento y el crecimiento económico de las naciones
TL;DR: In this paper, the authors argue that there cannot be sustained economic growth without entrepreneurship and that the entrepreneur serves as the lubricant of economic activity that transforms unexploited profit opportunities into commercializable product and services.
Journal ArticleDOI
Start-up subsidies: Does the policy instrument matter?
TL;DR: In this article, the authors evaluate the effects of participation in such programs on the performance of start-ups in high-tech and knowledge-intensive sectors that were founded in Germany between 2005 and 2012.
Journal ArticleDOI
Contracting With Wealth-Constrained Agents
TL;DR: In this paper, the authors examine how a project owner optimally selects a project operator and motivates him to deliver an essential non-contractible input (e.g., effort) when potential operators are privately informed about their limited wealth.
Journal ArticleDOI
Self-employment of older Americans: do recessions matter?
TL;DR: This article found that women are more likely to enter self-employment and that these decisions are clearly affected by recessions, although the effects differ by recession and gender, and women are less likely to become self-employed the deeper the recession.
References
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Book
The theory of economic development
TL;DR: Buku ini memberikan infmasi tentang aliran melingkar kehidupan ekonomi sebagaimana dikondisikan oleh keadaan tertentu, fenomena fundamental dari pembangunan EKonomi, kredit, laba wirausaha, bunga atas modal, and siklus bisnis as mentioned in this paper.
Posted ContentDOI
Credit Rationing in Markets with Imperfect Information.
Joseph E. Stiglitz,Andrew Weiss +1 more
TL;DR: In this paper, a model is developed to provide the first theoretical justification for true credit rationing in a loan market, where the amount of the loan and amount of collateral demanded affect the behavior and distribution of borrowers, and interest rates serve as screening devices for evaluating risk.
Book
Risk, Uncertainty and Profit
TL;DR: In Risk, Uncertainty and Profit, Frank Knight explored the riddle of profitability in a competitive market profit should not be possible under competitive conditions, as the entry of new entrepreneurs would drive prices down and nullify margins, however evidence abounds of competitive yet profitable markets as mentioned in this paper.
Journal ArticleDOI
The theory of economic development
Posted Content
Competition and Entrepreneurship
TL;DR: Kirzner as discussed by the authors argues that the assumption of perfect knowledge is unrealistic and argues that every market participant is a potential entrepreneur who can exploit a situation, which depends on a lack of perfect information among the market participants.