Economic Freedom and Veto Players Jointly Affect Entrepreneurship

Author(s): Christian Bjørnskov and Jacob Lihn Title: Journal of Entrepreneurship and Public Policy Accepted:
July 2017

This paper explores how the strength of political veto players affects the long-run credibility of economic institutions and they jointly affect entrepreneurial activity. We employ an annual panel covering 30 OECD countries from 1993-2011. 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 findings thus emphasize the likely transitional costs for entrepreneurs associated with institutional changes.

Bjørnskov, Christian and Jacob Lihn, "Economic Freedom and Veto Players Jointly Affect Entrepreneurship", Journal of Entrepreneurship and Public Policy.

Christian Bjørnskov


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Interdisciplinary European Studies

The European Union in a Changing World Order


This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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