2026 Undergraduate Research Showcase

Monetary Policy, Non-Competes, and Business Creation

Document Type

Student Presentation

Presentation Date

4-24-2026

Faculty Sponsor

Dr. Rafael Ribas

Abstract

This project examines whether monetary policy affects household business creation, destruction, and persistence, and how these effects vary across states based on legal enforceability of non-compete agreements (NCA). Using high-frequency monetary policy surprises, household survey panel, and state-level legislation, we estimate how contractionary policy influences entrepreneurial transitions across different legal environments. Rather than focusing on static measures of business ownership, we track whether business activity begins, ends, or persists over time, allowing us to study both entry and exit dynamics. Preliminary fixed-effects results suggest that contractionary monetary policy shocks are associated with weaker business outcomes, and this relationship remains robust across baseline and heterogeneity specifications. Because business creation may respond with a lag, we consider outcomes over multiple horizons, while also allowing for more immediate responses in business destruction. We compare effects using both baseline cross-state differences and changes in enforceability from 1991 to 2009. This project is part of a broader research agenda on how labor-market institutions shape entrepreneurship, mobility, and innovation.

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