Crime and the Economy in Mexican States : Heterogeneous Panel Estimates (1993-2012)

Verdugo-Yepes, Concepción and Pedroni, Peter and Hu, Xingwei (2015): Crime and the Economy in Mexican States : Heterogeneous Panel Estimates (1993-2012). Published in: IMF Working Paper No. 15/121

Abstract

This paper studies the transmission of crime shocks to the economy in a sample of 32 Mexican states over the period from 1993 to 2012. The paper uses a panel structural VAR approach which accounts for the heterogeneity of the dynamic state level responses in GDP, FDI and international migration flows, and measures the transmission via the impulse response of homicide rates. The approach also allows the study of the pattern of economic responses among states. In particular, the percentage of GDP devoted to new construction and the perception of public security are characteristics that are shown to be associated with the sign and magnitude of the responses of economic variables to crime shocks.

• Item Type: MPRA Paper
• Language: English
• Keywords: Crime, GDP, FDI, Panel Structural VAR
• Subjects: C - Mathematical and Quantitative Methods > C5 - Econometric Modeling; K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity

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