Government Debt Impacts on Interest Rates as Well as Entrepreneurship; A Panel Data Analysis for Western Europe, Japan and the United States (1990 – 2006)
11 Pages Posted: 1 Nov 2009
Date Written: October 29, 2009
Abstract
The contribution of the present paper is twofold. First, it will be pointed out that government debt has a positive effect on interest rates. Second, it will be shown that interest rates have a negative impact on entrepreneurship. In short, it will be concluded that government deficit (through the interest rate increase) is an obstacle to entrepreneurial activities, that in turn hinders economic growth. Panel data analysis will be used for the period 1990 – 2006 and data will be elaborated through the Eviews software package.
Keywords: entrepreneurship, corporate governance, economic growth, interest rates, government debt
JEL Classification: M13, G3, O4, E43, H6
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