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Journal Article
Why small business lending isn’t what it used to be
Since the Great Recession, bank lending to small businesses has fallen significantly, and policymakers have become concerned that these businesses are not getting the credit they need. Many reasons have been suggested for the decline. Our analysis shows that it has multiple sources, which means that trying to address any single factor may be ineffective or make matters worse. Any intervention should take all of the many causes of the decline in small business lending into consideration.
Journal Article
The Great Recession’s effect on entrepreneurship
Though the recent recession was the worst downturn since the Great Depression, some observers argue that one silver lining is an upswing in entrepreneurship. Recessions, they claim, provide laid-off workers with the motivation to start their own businesses, and a recent study suggests that in 2009 the number people becoming self employed spiked to its highest level in more than a decade. Unfortunately, a careful look at multiple sources of data shows that the Great Recession was actually a time of considerable decline in entrepreneurial activity in the United States.>
Journal Article
Economic policy uncertainty and small business expansion
Is uncertainty causing small business owners to behave in ways that are hindering the recovery? That question is at the center of an intense public debate. Though reasonable arguments have been presented on both sides, there is not much empirical evidence to draw on. To contribute some to the discussion, we investigated the statistical association between data on small business plans to hire and make capital expenditures and a measure of policy uncertainty. Our analysis suggests that uncertainty is adversely affecting small business owners? expansion plans.
Journal Article
The effect of falling home prices on small business borrowing
Small businesses continue to report problems in obtaining the financing they need. Because small business owners may rely heavily on the value of their homes to finance their businesses (through mortgages or home equity lines), the fall in housing prices might be one of the causes of their difficulty. We analyze information from a variety of sources and find that homes do constitute an important source of capital for small business owners and that the impact of the recent decline in housing prices is significant enough to be a real constraint on small business finances.
Working Paper
The Ins and Outs of Self-Employment: An Estimate of Business Cycle and Trend Effects
We examine quarterly microlevel data on labor market transitions taken from the Current Population Survey from 1990 to 2014 to estimate how the business cycle affects transitions into and out of self-employment from other labor market states. We control for individual demographics and occupational influences in our analysis to better pinpoint the effect of demand growth on these transitions. We find that changes in demand conditions substantially influence the marginal rate of transition into and out of self-employment from other labor market states, after taking into account demographic and ...
Report
Altered states: a perspective on 75 years of state income growth
According to a study featured in the Federal Reserve Bank of Cleveland's 2005 Annual Report, differences in state income levels can be explained largely by two factors: innovation and workforce skills. The study's findings suggest that increasing a region's knowledge base should be a primary component of economic development strategies.
Discussion Paper
Workshop on entrepreneurial finance: a summary
This Policy Discussion Paper summarizes papers that were presented at the Workshop on Entrepreneurial Finance, which was held March 12?13, 2009, at the Federal Reserve Bank of Cleveland. Researchers presented new empirical research that exploits data sets on entrepreneurial activity that are based on broad and representative data samples. Papers in the workshop focused primarily on analyses of the sources and structure of start-up finance, including the importance of bank lending, venture capital, angel investors, and owner equity.
Journal Article
The Shifting Source of New Business Establishments and New Jobs
As markets and business patterns change, new business establishments are created to serve them. Those new establishments can be provided by entrepreneurs creating new firms or by the owners of existing businesses opening new locations. We show that over the past three decades, new establishments have increasingly been provided by existing businesses opening new locations. Those new locations have created jobs at a higher rate than brand-new firms, which helps to boost job creation. Looking at both forms of new establishments shows that job creation is down following the recession, but new ...
Working Paper
State growth empirics: the long-run determinants of state income growth
Real average U.S. per capita personal income growth over the last 65 years exceeded a remarkable 400 percent. Also notable over this period is that the stark income differences across states have narrowed considerably: In 1939 the highest income state?s per capita personal income was 4.5 times the lowest, but by 1976 this ratio had fallen to less than 2 times. Since 1976, the standard deviation of per capita incomes at the state level has actually risen, as some higher-income states have seen their income levels rise relative to the median of the states. A better understanding of the sources ...