No abstract

Entrepreneurship has long been seen as an important instrument in stimulating and generating economic growth. The amount of research trying to identify key factors that drive entrepreneurship is considerable; yet, little consensus has been achieved. We argue that this lack of consensus could be on account of model uncertainty as empirical studies often tend to be selective on what variables are included in the final model. Drawing on recent literature, we demonstrate the benefits of Bayesian model averaging (BMA) in reducing the impact of model uncertainty on empirical research in entrepreneurship. Additionally, BMA provides measures of variable importance and can be seen as a complementary approach to dominance/relative importance analysis. We show that when model uncertainty is corrected for, gross domestic product per capita, unemployment, the marginal tax rate, and the volatility of inflation are the only macro variables significantly and universally associated with aggregate entrepreneurship. Furthermore, the emphasis on inflation and taxation suggests that governments have the power to influence the quantity and distribution of entrepreneurial activity by setting incentives that are not entrepreneurship specific but overlap significantly with general and fundamental principles of economic stability.

Summary. -Uncovering the effects of privatization is difficult, because privatization of a particular firm usually is not an accident. This paper tests the effects of privatization on productive and allocative (market) efficiency using a rich panel data set of 22 privatized cement plants from Turkey in the 1983-99 period. Since all public cement firms were privatized and we have preand post-privatization data for all, we are able to avoid the problem of endogeneity associated with sample selection. Our analysis goes beyond just examining the privatization effects and explores how privatization really works. Changes in objectives of the firm (ownership effect) and changes in market structure (environment effect) may both be responsible for privatization outcomes. We find that ownership effects are sufficient to achieve improvements in labor productivity. Our results on allocative efficiency, however, are dependent on changes in the competitive environment. While all plants seem to improve labor productivity through work force reductions, plants privatized to foreign buyers also increase their capital and investment significantly.

We investigate the effects of various tax policy innovations on stock market returns. By using a vector autoregressive model that controls for the mutual causality between fiscal policy and financial market performance, we test whether financial markets serve as a transmission mechanism for tax policy innovations. Our findings indicate that indirect taxes have a larger effect on market returns than do labor taxes. Further, corporate tax innovations do not have any statistically significant effect on stock returns. We consider that this finding is a result of a firm's ability to switch between equity financing and bond financing.

No abstract