IDEAS home Printed from https://ideas.repec.org/a/eee/ecmode/v49y2015icp286-295.html
   My bibliography  Save this article

Economic growth and crime: Is there an asymmetric relationship?

Author

Listed:
  • Goulas, Eleftherios
  • Zervoyianni, Athina

Abstract

We examine the relationship between crime and per-capita output growth in a panel of 26 countries for 1995–2009, focusing on the various channels through which crime can constrain growth and exploring the extent to which these channels are influenced by economic conditions. A simple structural growth model serves as a guide for the empirical specification and a reference point for the interpretation of the empirical results. Our estimates suggest significant potential gains from reducing crime during periods of worsening economic conditions, when market sentiment is pessimistic, and thus uncertainty regarding the return to saving is above average, employment is low, and the strain on government-sector resources through high public-safety spending is already sizable. Crime does not seem to be so harmful to growth when economic conditions are sufficiently satisfactory. In this respect, our results provide an explanation for the inconclusive empirical evidence, based on reduced-form models, regarding the strength of the growth–crime relationship.

Suggested Citation

  • Goulas, Eleftherios & Zervoyianni, Athina, 2015. "Economic growth and crime: Is there an asymmetric relationship?," Economic Modelling, Elsevier, vol. 49(C), pages 286-295.
    • Handle: RePEc:eee:ecmode:v:49:y:2015:i:c:p:286-295
    DOI: 10.1016/j.econmod.2015.04.014
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264999315001157
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econmod.2015.04.014?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. World Bank & United Nations Office on Drugs and Crime, 2007. "Crime, Violence, and Development : Trends, Costs, and Policy Options in the Caribbean," World Bank Publications - Reports 7687, The World Bank Group.
    2. Stephen Bond & Anke Hoeffler & Jonathan Temple, 2001. "GMM Estimation of Empirical Growth Models," Economics Papers 2001-W21, Economics Group, Nuffield College, University of Oxford.
    3. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    4. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    5. Anke E. Hoeffler, 2002. "The augmented Solow model and the African growth debate," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(2), pages 135-158, May.
    6. Eleftherios Goulas & Athina Zervoyianni, 2013. "Economic growth and crime: does uncertainty matter?," Applied Economics Letters, Taylor & Francis Journals, vol. 20(5), pages 420-427, March.
    7. Magdalena Morgese Borys & Éva Katalin Polgár & Andrei Zlate, 2008. "Real convergence and the determinants of growth in EU candidate and potential candidate countries - a panel data approach," Occasional Paper Series 86, European Central Bank.
    8. William F. Blankenau & Nicole B. Simpson & Marc Tomljanovich, 2007. "Public Education Expenditures, Taxation, and Growth: Linking Data to Theory," American Economic Review, American Economic Association, vol. 97(2), pages 393-397, May.
    9. Bayraktar, Nihal & Moreno-Dodson, Blanca, 2010. "How can public spending help you grow? an empirical analysis for developing countries," Policy Research Working Paper Series 5367, The World Bank.
    10. Agénor, Pierre-Richard, 2008. "Health and infrastructure in a model of endogenous growth," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1407-1422, December.
    11. Norman Gemmell & Richard Kneller & Ismael Sanz, 2011. "The Timing and Persistence of Fiscal Policy Impacts on Growth: Evidence from OECD Countries," Economic Journal, Royal Economic Society, vol. 121(550), pages 33-58, February.
    12. Agénor, Pierre-Richard, 2010. "A theory of infrastructure-led development," Journal of Economic Dynamics and Control, Elsevier, vol. 34(5), pages 932-950, May.
    13. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    14. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor & Francis Journals, vol. 19(3), pages 321-340.
    15. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    16. Andrea Bassanini & Stefano Scarpetta, 2003. "The Driving Forces of Economic Growth: Panel Data Evidence for the OECD Countries," OECD Economic Studies, OECD Publishing, vol. 2001(2), pages 9-56.
    17. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    18. Mauricio Cárdenas, 2007. "Economic growth in Colombia: A reversal of "Fortune"?," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República, vol. 25(53), pages 220-259, January.
    19. Afonso, António & Furceri, Davide, 2010. "Government size, composition, volatility and economic growth," European Journal of Political Economy, Elsevier, vol. 26(4), pages 517-532, December.
    20. Peri Giovanni, 2004. "Socio-Cultural Variables and Economic Success: Evidence from Italian Provinces 1951-1991," The B.E. Journal of Macroeconomics, De Gruyter, vol. 4(1), pages 1-36, September.
    21. Stephen Bond & Anke Hoeffler, 2001. "GMM Estimation of Empirical Growth Models," Economics Series Working Papers 2001-W21, University of Oxford, Department of Economics.
    22. Christiansen, Lone & Schindler, Martin & Tressel, Thierry, 2013. "Growth and structural reforms: A new assessment," Journal of International Economics, Elsevier, vol. 89(2), pages 347-356.
    23. Claudio Detotto & Edoardo Otranto, 2010. "Does Crime Affect Economic Growth?," Kyklos, Wiley Blackwell, vol. 63(3), pages 330-345, August.
    24. Robert J. Barro & Charles J. Redlick, 2011. "Macroeconomic Effects From Government Purchases and Taxes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(1), pages 51-102.
    25. Aisen, Ari & Veiga, Francisco José, 2013. "How does political instability affect economic growth?," European Journal of Political Economy, Elsevier, vol. 29(C), pages 151-167.
    26. Drakos, Konstantinos & Goulas, Eleftherios, 2006. "Investment and conditional uncertainty: The role of market power, irreversibility, and returns-to-scale," Economics Letters, Elsevier, vol. 93(2), pages 169-175, November.
    27. Dan‐Olof Rooth & Anders Stenberg, 2012. "The Shape of the Income Distribution and Economic Growth – Evidence from Swedish Labor Market Regions," Scottish Journal of Political Economy, Scottish Economic Society, vol. 59(2), pages 196-223, May.
    28. Ishita Chatterjee & Ranjan Ray, 2009. "Crime, Corruption and Institutions," Monash Economics Working Papers 20-09, Monash University, Department of Economics.
    29. Guariglia, Alessandra & Poncet, Sandra, 2008. "Could financial distortions be no impediment to economic growth after all? Evidence from China," Journal of Comparative Economics, Elsevier, vol. 36(4), pages 633-657, December.
    30. Andrea Bassanini & Stefano Scarpetta & Philip Hemmings, 2001. "Economic Growth: The Role of Policies and Institutions: Panel Data. Evidence from OECD Countries," OECD Economics Department Working Papers 283, OECD Publishing.
    31. Morgese Borys, Magdalena & Polgár, Éva Katalin & Zlate, Andrei, 2008. "Real convergence and the determinants of growth in EU candidate and potential candidate countries: a panel data approach," Occasional Paper Series 86, European Central Bank.
    32. Ray Burnham & Robert Feinberg & Thomas Husted, 2004. "Central city crime and suburban economic growth," Applied Economics, Taylor & Francis Journals, vol. 36(9), pages 917-922.
    33. repec:bla:scandj:v:95:y:1993:i:4:p:607-25 is not listed on IDEAS
    34. Guariglia, Alessandra & Tsoukalas, John & Tsoukas, Serafeim, 2012. "Investment, irreversibility, and financing constraints: Evidence from a panel of transition economies," Economics Letters, Elsevier, vol. 117(3), pages 582-584.
    35. Luciano Mauro & Gaetano Carmeci, 2007. "A Poverty Trap of Crime and Unemployment," Review of Development Economics, Wiley Blackwell, vol. 11(3), pages 450-462, August.
    36. repec:bla:obuest:v:64:y:2002:i:2:p:135-58 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Arton Hajdari & Artan Hajdini & Shenaj Haxhimustafa, 2024. "Legal Determinants That Impact Economic Growth," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 25(2), pages 76-107, April.
    2. Joshi, Swarup, 2022. "How effective are Governor's party affiliated campaign promises on crime? Evidence from U.S. states," Economic Modelling, Elsevier, vol. 113(C).
    3. Pengfei Jia & King Yoong Lim, 2021. "The stabilization role of police spending in a neo‐Keynesian economy with credit market imperfections," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(1), pages 103-125, February.
    4. King Yoong Lim & Pengfei Jia & Ali Raza, 2018. "Crime, Human Capital, and the Impact of Different Taxation," Working Papers 220851234, Lancaster University Management School, Economics Department.
    5. Roxana Gutierrez-Romero & Nayeli Salgado, 2022. "New trends in South-South migration: The economic impact of COVID-19 and immigration enforcement," Working Papers 108, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    6. LAWAL Adedoyin Isola & AMOGU Ezinne Olufadesola & ADEOTI Johnson Olabode & IJAIYA Muftau Adeniyi, 2017. "Fraud And Business Cycle: Empirical Evidence From Fraudsters And Fraud Managers In Nigeria," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 12(1), pages 110-128, April.
    7. Cheng, Zhiming & Smyth, Russell, 2015. "Crime victimization, neighborhood safety and happiness in China," Economic Modelling, Elsevier, vol. 51(C), pages 424-435.
    8. René Cabral & André Varella Mollick & Eduardo Saucedo, 2019. "Foreign Direct Investment In Mexico, Crime, And Economic Forces," Contemporary Economic Policy, Western Economic Association International, vol. 37(1), pages 68-85, January.
    9. Adekoya Adenuga Fabian & Razak Nor Azam Abdul, 2016. "The Link Between Economic Growth, Crime and Deterrence Measures in Nigeria," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 26(4), pages 24-40, November.
    10. Roberto Coronado & Eduardo Saucedo, 2019. "Drug-related violence in Mexico and its effects on employment," Empirical Economics, Springer, vol. 57(2), pages 653-681, August.
    11. Ioannis Laliotis, 2016. "Crime and unemployment in Greece: Evidence before and during the crisis," Economics and Business Letters, Oviedo University Press, vol. 5(1), pages 10-16.
    12. Astarita, Caterina & Capuano, Carlo & Purificato, Francesco, 2018. "The macroeconomic impact of organised crime: A post-Keynesian analysis," Economic Modelling, Elsevier, vol. 68(C), pages 514-528.
    13. Pengfei Jia & King Yoong Lim & Ali Raza, 2020. "Crime, different taxation, police spending and embodied human capital," Manchester School, University of Manchester, vol. 88(5), pages 664-698, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eleftherios Goulas & Athina Zervoyianni, 2013. "The Growth-Crime Relationship: Are There any Asymmetries?," Working Paper series 54_13, Rimini Centre for Economic Analysis.
    2. Goulas, Eleftherios & Zervoyianni, Athina, 2013. "Growth, deficits and uncertainty: Theoretical aspects and empirical evidence from a panel of 27 countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(4), pages 380-392.
    3. Eleftherios Goulas & Athina Zervoyianni, 2013. "Growth, Deficits and Uncertainty: Theoretical Aspects and Empirical Evidence," Working Paper series 53_13, Rimini Centre for Economic Analysis.
    4. Eleftherios Goulas & Athina Zervoyianni, 2013. "Economic growth and crime: does uncertainty matter?," Applied Economics Letters, Taylor & Francis Journals, vol. 20(5), pages 420-427, March.
    5. Eleftherios Goulas & Athina Zervoyianni, 2012. "Growth, Deficits and Uncertainty in a Panel of 28 Countries," Working Paper series 52_12, Rimini Centre for Economic Analysis.
    6. Goulas, Eleftherios & Zervoyianni, Athina, 2018. "Active labour-market policies and output growth: Is there a causal relationship?," Economic Modelling, Elsevier, vol. 73(C), pages 1-14.
    7. Bayraktar-Sağlam, Bahar & Yetkiner, Hakan, 2014. "A Romerian contribution to the empirics of economic growth," Journal of Policy Modeling, Elsevier, vol. 36(2), pages 257-272.
    8. Kumar, Surender, 2013. "Crime and Economic Growth: Evidence from India," MPRA Paper 48794, University Library of Munich, Germany.
    9. E. Tsanana & X. Chapsa & C. Katrakilidis, 2016. "Is growth corrupted or bureaucratic? Panel evidence from the enlarged EU," Applied Economics, Taylor & Francis Journals, vol. 48(33), pages 3131-3147, July.
    10. Na Hou & Bo Chen, 2013. "Military Expenditure And Economic Growth In Developing Countries: Evidence From System Gmm Estimates," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(3), pages 183-193, June.
    11. Zergawu, Yitagesu Zewdu & Walle, Yabibal M. & Giménez-Gómez, José-Manuel, 2020. "The joint impact of infrastructure and institutions on economic growth," Journal of Institutional Economics, Cambridge University Press, vol. 16(4), pages 481-502, August.
    12. Xanthippi Chapsa & Athanasios L. Athanasenas & Nikolaos Tabakis, 2019. "Real Convergence in EU-15: A Comparative Analysis of North versus South Europe," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 3-21.
    13. Ünal Töngür & Adem Yavuz Elveren, 2017. "The nexus of economic growth, military expenditures, and income inequality," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(4), pages 1821-1842, July.
    14. Vogel, Johanna, 2013. "Regional Convergence in Europe: A Dynamic Heterogeneous Panel Approach," MPRA Paper 51794, University Library of Munich, Germany.
    15. Alali, Walid Y., 2010. "Impact of Institutions and Policy on Economic Growth: Empirical Evidence," MPRA Paper 115610, University Library of Munich, Germany.
    16. Li, Hongbin & Yang, Zheyu & Yao, Xianguo & Zhang, Haifeng & Zhang, Junsen, 2012. "Entrepreneurship, private economy and growth: Evidence from China," China Economic Review, Elsevier, vol. 23(4), pages 948-961.
    17. Lehmann, Hartmut & Silvagni, Maria Giulia, 2013. "Is There Convergence of Russia's Regions? Exploring the Empirical Evidence: 1995–2010," IZA Discussion Papers 7603, Institute of Labor Economics (IZA).
    18. Saima Nawaz & M. Idrees Khawaja, 2016. "Fiscal Policy, Institutions And Growth: New Insights," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(05), pages 1251-1278, December.
    19. Bianka Dettmer, 2012. "Business services outsourcing and economic growth: Evidence from a dynamic panel data approach," Jena Economics Research Papers 2012-049, Friedrich-Schiller-University Jena.
    20. Berk, Istemi & Kasman, Adnan & Kılınç, Dilara, 2020. "Towards a common renewable future: The System-GMM approach to assess the convergence in renewable energy consumption of EU countries," Energy Economics, Elsevier, vol. 87(C).

    More about this item

    Keywords

    Economic growth; Crime;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:49:y:2015:i:c:p:286-295. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.