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Entrepreneurial activity, risk, and the business cycle

Publication ,  Journal Article
Rampini, AA
Published in: Journal of Monetary Economics
April 1, 2004

This paper analyzes a model in which the risk associated with entrepreneurial activity implies that the amount of such activity is procyclical and results in amplification and intertemporal propagation of productivity shocks. In the model risk averse agents choose between a riskless project and a risky project with higher expected output ('the entrepreneurial activity'). Agents who become entrepreneurs need to bear part of the project-specific risk for incentive reasons. More agents become entrepreneurs when productivity is high, because agents are more willing to bear risk and need to bear less risk for incentive reasons. Furthermore, cross-sectional heterogeneity can be countercyclical. © 2003 Elsevier B.V. All rights reserved.

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Published In

Journal of Monetary Economics

DOI

ISSN

0304-3932

Publication Date

April 1, 2004

Volume

51

Issue

3

Start / End Page

555 / 573

Related Subject Headings

  • Economics
  • 3803 Economic theory
  • 3801 Applied economics
  • 3502 Banking, finance and investment
  • 1403 Econometrics
  • 1402 Applied Economics
  • 1401 Economic Theory
 

Citation

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Rampini, A. A. (2004). Entrepreneurial activity, risk, and the business cycle. Journal of Monetary Economics, 51(3), 555–573. https://doi.org/10.1016/j.jmoneco.2003.06.003
Rampini, A. A. “Entrepreneurial activity, risk, and the business cycle.” Journal of Monetary Economics 51, no. 3 (April 1, 2004): 555–73. https://doi.org/10.1016/j.jmoneco.2003.06.003.
Rampini AA. Entrepreneurial activity, risk, and the business cycle. Journal of Monetary Economics. 2004 Apr 1;51(3):555–73.
Rampini, A. A. “Entrepreneurial activity, risk, and the business cycle.” Journal of Monetary Economics, vol. 51, no. 3, Apr. 2004, pp. 555–73. Scopus, doi:10.1016/j.jmoneco.2003.06.003.
Rampini AA. Entrepreneurial activity, risk, and the business cycle. Journal of Monetary Economics. 2004 Apr 1;51(3):555–573.
Journal cover image

Published In

Journal of Monetary Economics

DOI

ISSN

0304-3932

Publication Date

April 1, 2004

Volume

51

Issue

3

Start / End Page

555 / 573

Related Subject Headings

  • Economics
  • 3803 Economic theory
  • 3801 Applied economics
  • 3502 Banking, finance and investment
  • 1403 Econometrics
  • 1402 Applied Economics
  • 1401 Economic Theory