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Economic Growth and Crime: Does Uncertainty Matter?

  • Eleftherios Goulas

    ()

    (Department of Economics, University of Patras, Greece)

  • Athina Zervoyianni

    ()

    (Department of Economics, University of Patras, Greece)

This paper contributes to the crime literature by exploring how the crime-uncertainty interaction impacts on economic growth. Using a panel of 25 countries over the period 1991-2007, we find evidence suggesting that increased crime has an asymmetric effect on growth depending on the future prospects of the economy as reflected in the degree of macroeconomic uncertainty. In particular, our results indicate that higher-than-average macroeconomic uncertainty enhances the adverse impact of crime on growth implying that a 10% increase in the crime rate can reduce annual per-capita GDP-growth by between 0.49 and 0.62 percent.

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Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 51_12.

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Date of creation: Jul 2012
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Handle: RePEc:rim:rimwps:51_12
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