CRIME AND FISCAL POLICY IN EUROPE: THE EFFECT OF SHADOW ECONOMY

Eleftherios Goulas and Socrates Karidis

Global Economy Journal (GEJ), 2020, vol. 20, issue 03, 1-16

Abstract: We empirically investigate the role of fiscal policies on criminal activity using a sample of 25 EU countries over the period 2000–2013. Our analysis indicates that tight fiscal policies appear to have a positive effect on crime. This effect becomes stronger when property (non-violent) crime rates are considered. Further, the presence of high levels of shadow economy in a country provides a very strong mitigating factor on the adverse effect of public policies on crime. The initially strong link between tight fiscal policy and non-violent crime weakens significantly in the presence of undocumented economic activities which compensate for the lack of formal economic opportunities.

Keywords: Crime; fiscal policy; shadow economy (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1142/S2194565920500177

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