Volatile Interest Rates, Volatile Crime Rates: A new argument for interest-rate smoothing

Garett Jones and Ali Kutan

William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: Good monetary policy requires estimates of all of its effects: monetary policy impacts traditional economic variables such as output, unemployment rates, and inflation. But does monetary policy influence crime rates? By extending the vector autoregression literature, we derive estimates of the dynamic effect of higher interest rates on crime rates. Higher interest rates have socially and statistically significant positive effects on rates of theft and knife robberies, while effects on rates of burglary and assault are smaller and statistically insignificant. Higher interest rates have no effect on homicide rates. We conclude that monetary policy influences the rate of economically-motivated crimes.

Keywords: crime; monetary policy; vector autoregressive models (VARs) (search for similar items in EconPapers)
JEL-codes: C3 E5 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2004-05-01
New Economics Papers: this item is included in nep-cfn, nep-mac and nep-mon
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Citations: View citations in EconPapers (4)

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