Does Crime Affect Economic Growth?

16 Pages Posted: 19 Jul 2010  

Claudio Detotto

Università di Corsica (Laboratoire LISA - UMR 6240 CNRS); CRENoS (Centre for North South Economic Research)

Edoardo Otranto

University of Messina; Universita di Cagliari - Centre for North South Economic Research (CRENOS)

Abstract

Criminal activity acts like a tax on the entire economy: it discourages domestic and foreign direct investments, it reduces firms' competitiveness, and reallocates resources creating uncertainty and inefficiency. Although the impact of economic variables on crime has been widely investigated, there is not much concern about crime also affecting the overall economic performance. This work aims to bridge this gap by presenting an empirical analysis of the macroeconomic consequences of criminal activity. Italy is the case study for the time span 1979–2002. Dealing with a state space framework, a time varying parameter approach is employed to measure the impact of criminality on real Gross Domestic Product along time, and to measure the asymmetric impact in recession and expansion periods. The analysis is completed evaluating the effects of crime fluctuations in the long period by an impulse response analysis.

Suggested Citation

Detotto, Claudio and Otranto, Edoardo, Does Crime Affect Economic Growth?. Kyklos, Vol. 63, Issue 3, pp. 330-345, August 2010. Available at SSRN: https://ssrn.com/abstract=1640229 or http://dx.doi.org/10.1111/j.1467-6435.2010.00477.x

Claudio Detotto

Università di Corsica (Laboratoire LISA - UMR 6240 CNRS) ( email )

Jean Nicoli BP 52
Corte, Corsica 20250
France

HOME PAGE: http://umrlisa.univ-corse.fr/

CRENoS (Centre for North South Economic Research) ( email )

Via Muroni, 25
Sassari, 07100
Italy

HOME PAGE: http://crenos.unica.it/crenos/

Edoardo Otranto

University of Messina ( email )

Piazza Pugliatti, 1
Messina, 98122
Italy

Universita di Cagliari - Centre for North South Economic Research (CRENOS) ( email )

V. S. Ignazio 78
Cagliari, 09124
Italy

Paper statistics

Downloads
8
Abstract Views
2,328