Abstract
Does new business formation cause economic growth? Much recent research, initiated by Fritsch and Mueller (2004), has been devoted to this question (for an overview of this literature, see Fritsch 2007). Most studies find that long-run (supply-side) effects of new business formation are more pronounced than the direct short-run effects. Fritsch and Mueller (2004) enumerate four categories of these supply-side effects: securing efficiency, acceleration of structural change, amplified innovation, and greater variety of products. All research on this topic to date has in common that it analyzes the short-run and long-run relationship between new business formation and economic development by means of distributed lag models.KeywordsGross Domestic ProductUnit RootError Correction ModelBusiness FormationPanel Unit Root TestThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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