Two essays on the macroeconomic analysis of government policies and entrepreneurship

Abstract

In this thesis, I study the macroeconomic link between government policies and entrepreneurship. In the first chapter, I look at the informal economy in high-income countries and show that taxes and the quality of governance can account for a large fraction of cross country differences in informality. In the second chapter, I ask why the East German economy, in contrast to other transition economies, suffers from a lack of entrepreneurial activity and low growth rates. In particular, I study how the integration of East Germany into an established economy - West Germany - adversely affected the allocation of entrepreneurial talent in East Germany