The effect of macroeconomic variables on entrepreneurship in industry in Iran: TVP-FAVAR approach

Document Type : Research Paper

Authors

1 2. Department of Economics, Faculty of Administrative and Economic Sciences, Ferdowsi University, Mashhad, Iran

2 Department of family businesses and community-oriented innovation, Faculty of Family Sciences, University of Tehran

Abstract

Objective: The importance of entrepreneurship is highlighted  due to its role in innovation, accepting risk and trying to improve the current situation, and adopting appropriate policies requires knowing the factors affecting entrepreneurship. In the meantime, an increasing number of researches show that the macroeconomic performance affects the decisions of starting new businesses. This article intends to evaluate the effect of macroeconomic variables on entrepreneurship from the perspective of starting new businesses in the industrial sector in Iran, considering the productive role of industrial activities in the prosperity of economies.
Method: The research is applied in terms of purpose and based on the collection of correlation analysis data, and the relationship between macroeconomic variables and entrepreneurship has been measured in the framework of time-variable parameter generalized vector regression econometric model (TVP- FAVAR). The data of this study are seasonal and related to the time period of 2006-2021.
Results: Positive GDP shocks are associated with increasing entrepreneurship in the industrial sector. But inflation and unemployment shocks reduce entrepreneurship in the industry sector. The shock effect of capital formation is fixed.
Conclusion: Macroeconomic indicators have significant effects on entrepreneurship in the industrial sector. Therefore, the development of entrepreneurship requires the adoption of policies aimed at improving the macroeconomic environment.

Main Subjects

References

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