A Time Varying Parameter Approach to Analyze the Macroeconomic Consequences of Crime
Abstract
Criminal activity performs like a tax on the entire economy - it discourages domestic and foreign direct investments, it reduces firms’ competitiveness, and reallocates resources creating uncertainty and inefficiency. Although the impact of economic variables on crime has been widely investigated, there is not much concern about crime also affecting the overall economic performance. This work aims to bridge this gap by presenting an empirical analysis of the macroeconomic consequences of criminal activity. Italy is the case study for the time span 1979-2002. Dealing with a state space framework, a time varying parameter approach is employed to measure the impact of criminality on real Gross Domestic Product along time, and to measure the asymmetric impact in recession and expansion periods. The analysis is completed evaluating the effects of crime fluctuations in the long period by an impulse response analysis.Download Info
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Paper provided by Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia in its series Working Paper CRENoS with number 201002.Length:
Date of creation: 2010
Date of revision:
Handle: RePEc:cns:cnscwp:201002
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Keywords: economic growth; crime; business cycle; crowding-out effects; impulse response analysis; kalman filter;Find related papers by JEL classification:
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
- E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- K14 - Law and Economics - - Basic Areas of Law - - - Criminal Law
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