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

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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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Bibliographic 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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Keywords: Crime; property rights economic development; credit markets;

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  1. Baumol, William J, 1990. "Entrepreneurship: Productive, Unproductive, and Destructive," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 893-921, October.
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  3. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
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  8. Mancur Olson, 1996. "Distinguished Lecture on Economics in Government: Big Bills Left on the Sidewalk: Why Some Nations Are Rich, and Others Poor," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 3-24, Spring.
  9. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
  10. Aghion, Philippe & Bolton, Patrick, 1997. "A Theory of Trickle-Down Growth and Development," Review of Economic Studies, Wiley Blackwell, vol. 64(2), pages 151-72, April.
  11. Isaac Ehrlich, 1996. "Crime, Punishment, and the Market for Offenses," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 43-67, Winter.
  12. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1993. "Why Is Rent-Seeking So Costly to Growth?," American Economic Review, American Economic Association, vol. 83(2), pages 409-14, May.
  13. Baland, J-M & Francois, P, 1997. "Rent-Seeking, Resource Booms and the Size of the Entrepreneurial Class : A Theoretical Analysis," Papers 191, Notre-Dame de la Paix, Sciences Economiques et Sociales.
  14. Nicolas Marceau & Steeve Mongrain, 1999. "Dissuader le crime," Cahiers de recherche du Département des sciences économiques, UQAM 9902, Université du Québec à Montréal, Département des sciences économiques.
  15. Richard B. Freeman, 1994. "Crime and the Job Market," NBER Working Papers 4910, National Bureau of Economic Research, Inc.
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Cited by:
  1. Marceau, Nicolas & Mongrain, Steeve, 1999. "Dissuader le crime : un survol," L'Actualité Economique, Société Canadienne de Science Economique, vol. 75(1), pages 123-147, mars-juin.
  2. Fender, John, 1999. "A general equilibrium model of crime and punishment," Journal of Economic Behavior & Organization, Elsevier, vol. 39(4), pages 437-453, July.

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