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Claudio Detotto and Pulina Manuela
''Testing the effects of crime on the Italian economy''
( 2010, Vol. 30 No.3 )
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
JEL: C1 - Econometric and Statistical Methods: General
A1 - General Economics: General
Manuscript Received : Jul 26 2010 Manuscript Accepted : Aug 04 2010

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