Testing the effects of crime on the Italian economy

Claudio Detotto and Manuela Pulina

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Abstract: This paper aims at assessing the causal and temporal relationships between crime and the economic indicators related to the aggregated demand function. The case study is Italy and a quarterly frequency is used (1981:1 - 2005:4). A Vector Autoregressive Correction Mechanism (VECM) is employed after having assessed the integration and cointegration status of the variables under investigation. Long and short run dynamics are estimated. A Granger causality test is also implemented to establish temporal interrelationships. The main findings are that, in the short run, crime positively effects GDP and government expenditure, while has a crowding out effect on exports. In the long run, crime positively leads imports and inflation, whereas negatively investments and government expenditure.

Keywords: crime; aggregated demand; short and long run dynamics; Granger causality (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (2)

Published in Economics Bulletin, 2010, 30 (3), pp.2063-2074

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