Macroeconomic Determinants, Innovation and the Birth of New Firms: Negative Binomial Regression Approach

Abstract This paper employs the random-effects negative binomial regression model (RENBM) to test the relationship between macroeconomic factors and the birth of new firms. The test is across countries and uses count data. We consider a sample of 135 panel-data observations, taken from 27 countries in the European Union (EU) during the period 2004 to 2008. We found that the birth of new firms is positively related to the growth of gross domestic product (GDP), inflation and openness, and is negatively related to unemployment. This result is in accordance with macroeconomic theory. The results also show that expenditure on research and development (R&D) has a significant positive effect on the number of new firms. This result further supports the hypothesis of new economic growth theory. Moreover, the empirical evidence shows a positive correlation between the number of new businesses and ethnic heterogeneity

Purchasing power parity theory determinants – A Swedish destination study of international tourists: a count data approach

This paper employs the time-series negative binomial regression model (TNBM) to test the hypothesis effects of purchasing power parity (PPP) theory on the counts data of visitors to the north-west of Sweden (SW6 region). We consider a sample of monthly time-series count data from 1993:01 to 2008:12 taken from five countries: Denmark, the United Kingdom, Switzerland, Japan and the United States. For each visiting country, we specify separate equations by including the relative available information. We then estimate these equations using the time - series negative binomial model (TNBM). The benefit of this model is that it is much more flexible and therefore likely to fit better (if the data is not Poisson distributed) and hence is more efficient than single-equation estimation methods such as least squares. We found that the number of visitors to Sweden is negatively related to the absolute PPP and relative PPP. This result is in accordance with macroeconomic theory and the PPP theory. The results also show that some lagged dependent variables, and several monthly dummies (representing seasonal effects), have a significant impact on the number of visitors to north-west Sweden. We also find that, in at least some cases, absolute PPP, relative PPP and relative price have significant effects on international tourism demand

Investigating Causal Relations between the GDP Cycle and Unemployment : Data from Finland

This paper investigates the causal relationship between two macroeconomic variables, the gross domestic product (GDP) cycle and unemployment, in Finland. This has been done using the vector autoregressive (VAR) model for the period Q1 1995 to Q2 2011. The goal of this study is to gather further evidence for the relationship between the GDP cycle and total, male and female unemployment individually, with special reference to Finland which is a member state of the EU, and has been part of European monetary union, since 1995. The relationship has been investigated using the Granger-causality test in accordance with Okun's (1962) formula. The empirical facts mostly indicate the existence of a uni-directional causal relationship from the GDP cycle to unemployment. This pattern is not found to be significant when using the model for unemployment in women however. The coefficients of unemployment, total, male and female, are abstracted from the Okun's coefficient and found to be around -4 per cent total, male and female unemployment individually, -5 per cent and -1 per cent respectively. These results also have important implications for determining macroeconomic and labor-market policy

Profitability in Swedish Micro-Firms : a quantile regression approach

The purpose of this study is to identify a function for the profitability of Swedish micro firms in the sectors of health, transport, trade and metal. In order to understand how micro firms relate to key variables, such as firm size, growth of sales, productivities, lagged profits, asset turnover and firm’s age, OLS (Ordinary Least Squares), and the more robust quantile regression techniques, are used to estimate micro-firm profitability. Data from 2007 is used for this purpose. The results show that growth (competitive condition) and total factor productivity (comparative advantage) have a significant positive effect on micro-firm profitability, and that size (diminishing returns states) is found to have a rather significant negative effect on micro-firm profitability. The results also indicate a strong relationship between microeconomic theory suggestions and micro-firm profitability for the all micro firms except those in the metal sector. Moreover, the quantile regression approach provided a better understanding, regarding the dynamics of the factors that affect profitability, and provided more interesting results than OLS normally do

Testing for Granger causality between industrial output and CPI in the presence of regime shift: Swedish data

In this paper, we focus on the Granger causality test in the presence of regime shift. We apply a vector autoregressive (4) model on Swedish series of industrial output and consumer price index for the period 1980:1-1998:6. To test for causality, three different test methods namely the single equation Likelihood Ratio test, the systemwise Rao's F- test and the Bootstrap test, have been used in this study. We show that when the assumption of parameter constancy is violated, due to the occurrence of the structural changes, Granger causality tests can provide misleading inference about the underlining relationship of causality.Economic change, Economic forecasting, Parametric measures

Assessing Risk Factors Of Business Failure In The Manufacturing Sector : A Count Data Approach From Sweden

Abstract The paper investigates risk factors of business failure of small-sized manufacturing firms in Sweden. Traditionally, linear models are applied to estimate the influence of risk factors on business failure by using continuous data. By contrast, in this study a count data approach is employed to deduce consistent Poisson, Quasi-Poisson, and Negative-Binomial estimators by using bankruptcy count data of small-sized Swedish manufacturing firms. Findings confirm that interest and exchange rates are significant determinants of business failure. Moreover, we found that openness is a determinant of business success. Our main finding highlights the role of business productivity, which turned out to be the main risk factor of business failure

Macroeconomic Determinants, Innovation and the Birth of New Firms: Negative Binomial Regression Approach : Negative Binomial Regression Approach

 Abstract This paper employs the random-effects negative binomial regression model (RENBM) to test the relationship between macroeconomic factors and the birth of new firms. The test is across countries and uses count data. We consider a sample of 135 panel-data observations, taken from 27 countries in the European Union (EU) during the period 2004 to 2008. We found that the birth of new firms is positively related to the growth of gross domestic product (GDP), inflation and openness, and is negatively related to unemployment. This result is in accordance with macroeconomic theory. The results also show that expenditure on research and development (R&D) has a significant positive effect on the number of new firms. This result further supports the hypothesis of new economic growth theory. Moreover, the empirical evidence shows a positive correlation between the number of new businesses and ethnic heterogeneity.

Macroeconomic Factors and Swedish Small and Medium-Sized Manufacturing Firm Failure

This paper employs a time series cointegration approach to evaluate the relationship between manufacturing firm failure and macroeconomic factors for the Swedish manufacturing sector in the period 1986 – 2006. It uses quarterly data for this period. We found that in long run a firms’ failure is negatively related to the level of industrial activity, money supply, GNP and economic openness rate, and positively related to the real wage. Time series Error Correction Model (ECM) estimates suggest that macroeconomic risk factors impinge on firm failures on the same direction in both the short run and the long run and that adjustment to stabilise the relationship is quite slow.firm failure; macroeconomic factors; cointegration analysis; diagnostic tests

Estimating the Swedish and Norwegian international tourism demand using (ISUR) technique

This paper estimates the demand for tourism to Sweden and Norway for five countries: Denmark, the United Kingdom, Switzerland, Japan, and the United States. For each visiting country, and for Sweden and Norway, we specify separate equations by including relative information. We then estimate these equations using Zellner’s Iterative Seemingly Unrelated Regressions (ISUR). The benefit of this model is that the ISUR estimators utilize the information present in the error correlation of the cross regressions (or equations) and hence are more efficient than single equation estimation methods such as ordinary least squares. Monthly time series data from 1993:01 to 2006:12 are used. The results show that the consumer price index, some lagged dependent variables, and several monthly dummies(representing seasonal effects) have a significant impact on the number of visitors to the SW6 region in Sweden and Tröndelag in Norway. We also find that, in at least some cases, relative prices and exchange rates have a significant effect on international tourism demand.Tourism demand; Significant factors; Iterative Seemingly Unrelated Regressions (ISUR)