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Getting Over the Hump: A Theory of Crime, Credit and Accumulation

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Author Info
Huw Lloyd-Ellis () (Center for Research on Economic Fluctuations and Employment & University of Toronto)
Nicolas Marceau () (Center for Research on Economic Fluctuations and Employment & UQAM)

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Abstract

We explore the implications of endogenous credit market imperfections for the relationship between property crime and the process of economic development. In the initial stages of development, property crime rises as the opportunities to gain from illegal activities expand. In later stages, however, crime falls as capital market imperfections are overcome and legal activities become more profitable. We detail the forces which determine whether the crime generated by an economy's early growth will choke off the development process. We also find that endogenous credit constraints reduce the effectiveness of public expenditures that raise expected criminal sanctions, and that spending on ex ante crime prevention may be more cost-effective.

Nous construisons un modèle dans lequel la capacité de l'économie à se développer est déterminée de façon endogène par l'interaction entre les ratés du marché du capital et le taux de crime contre la propriété. Dans les premiers stades du développement économique, les crimes contre la propriété croissent en même temps que la richesse s'accumule, les gains que procure l'activité criminelle étant alors d'autant plus élevés. Mais dans les stades de développement ultérieurs, ces crimes diminuent au fur et à mesure que la richesse s'accumule car les ratés du marché du capital sont de moins en moins importants. Dans certaines économies, les crimes contre la propriété, observables dans les premiers stades du développement, ralentissent et éventuellement arrêtent la croissance économique, alors que dans d'autres, l'économie poursuit sa croissance et atteint la phase de déclin de l'activité criminelle. Insistant sur l'importance des ratés endogènes du marché du capital, nous analysons également l'impact de politiques publiques de prévention et de dissuasion du crime.

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Publisher Info
Paper provided by CREFE, Université du Québec à Montréal in its series Cahiers de recherche CREFE / CREFE Working Papers with number 65.

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Length: 38 pages
Date of creation: Oct 1998
Date of revision:
Handle: RePEc:cre:crefwp:65

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Related research
Keywords: Crime; property rights economic development; credit markets;

Find related papers by JEL classification:
O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment
K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
N43 - Economic History - - Government, War, Law, and Regulation - - - Europe: Pre-1913

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References listed on IDEAS
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