2007•Global CrimeRequires access

Will Inflation Increase Crime Rate? New Evidence from Bounds and Modified Wald Tests

Chor Foon Tang, Hooi Hooi Lean

Abstract

This paper employs the modified Wald (MWALD) causality test to re-examine the relationship between crime and its determinants (inflation and unemployment) in the United States from 1960 to 2005. Bounds test approach is employed to investigate the existence of a long-run relationship. The empirical evidence suggests that inflation and crime rates are cointegrated with a positive relationship. Moreover, the causal link is from inflation and unemployment to crime.

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Key concepts: Economics, Wald test, Unemployment, Inflation (cosmology), Causality (physics), Econometrics, Empirical evidence, Cointegration