TY - JOUR
T1 - The effects of crime on the Mexican economy: A vector error correction model
AU - Carreon-Guzman, Diana L.
AU - Garza-Rodriguez, Jorge
AU - Garza-Turrubiates, David R.
AU - Gonzalez-Camargo, Ricardo A.
AU - Lozano-Castillo, Eugenio
PY - 2015/1/1
Y1 - 2015/1/1
N2 - The aim of this study was to examine the extent to which crime affects the components of aggregate demand and vice versa for the case of Mexico, using quarterly data for the number of homicides and the components of aggregate demand for the period from 1990 to 2010. We estimated a Vector Error Correction Model in order to be able to distinguish the short run and long run dynamics present between crime and aggregate demand and its components. In the short run, it was found that none of the components of aggregate demand affect crime and that the only component of aggregate demand affected by crime is private consumption, which is affected negatively by an increase in the crime rate. It was also found that crime has a positive effect on GDP, government consumption and imports in the long run. On the other hand, private consumption, investment and exports have a negative effect on crime in the long run. Thus, the results obtained in this study indicate the existence of a bidirectional relationship between crime and economic activity in Mexico.
AB - The aim of this study was to examine the extent to which crime affects the components of aggregate demand and vice versa for the case of Mexico, using quarterly data for the number of homicides and the components of aggregate demand for the period from 1990 to 2010. We estimated a Vector Error Correction Model in order to be able to distinguish the short run and long run dynamics present between crime and aggregate demand and its components. In the short run, it was found that none of the components of aggregate demand affect crime and that the only component of aggregate demand affected by crime is private consumption, which is affected negatively by an increase in the crime rate. It was also found that crime has a positive effect on GDP, government consumption and imports in the long run. On the other hand, private consumption, investment and exports have a negative effect on crime in the long run. Thus, the results obtained in this study indicate the existence of a bidirectional relationship between crime and economic activity in Mexico.
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M3 - Article
SN - 1545-2921
VL - 35
SP - 959
EP - 967
JO - Economics Bulletin
JF - Economics Bulletin
IS - 2
ER -
