Purpose
Since the literature on the effect of the unemployment rate as reflection of economic fluctuations on crime shows an empirically ambiguous effect, the purpose of this paper is to argue that a new way of modeling the dynamics of unemployment and crime by focussing on the transitory and persistent effect of unemployment on crime helps resolve this ambiguity.
Design/methodology/approach
Panel data for US states from 1965 to 2006 are examined using the Mundlak (1978) methodology to incorporate the dynamic interactions between crime and unemployment into the estimation.
Findings
After decomposing the unemployment effect on crime into a transitory and persistent effect, evidence of a strong positive correlation between unemployment and almost all types of crime rates is unearthed. This evidence is robust to endogeneity and the controlling for cross-panel correlation and indicators for state imprisonment.
Originality/value
The paper is the first to examine the dynamics of the interaction of crime and economic fluctuations using the temporary and persistent effects framework of Mundlak (1978). In one set of estimates, one can evaluation both the short- and long-run effects of changes of unemployment on crime.
This study aims to estimate the effects of oil price shocks on seaborne trade in Iran; in particular, port throughput of three leading ports through economic fluctuations of three major trading partners of Iran, based on quarterly data for the period of 1999Q2 to 2018Q1. We apply a standard vector autoregressive (VAR) approach using Cholesky decomposition. The results indicate that with increasing oil revenues in short-run, seaborne trade be further directed towards Shahid Rajaei port while rising oil revenues changes the combination of goods handled in Emam Khomeini and Bushehr ports. In the long run, the share of oil price fluctuations in explaining the variations of Shahid Rajaei port throughput is higher than the other two. In fact, increases in oil revenues cause an increase in the volume of industrial and containerized seaborne cargo trade.
The Keynes' "General Theory", published 80 years ago, overthrew the neoclassical orthodoxy and created a new understanding of how market economy works. The main idea of the "General Theory" is that the amount of employment depends on the level of effective demand. Keynes believed that much economic activity is governed by "animal spirits" because of the existence of inescapable uncertainty about the future. In Keynes' view these "animal spirits" are the main cause for economic fluctuations. The uncertainty and "animalspirits"make investments unstable. He made distinction between risk (which is measurable) and uncertainty (which is not). This is the reason why Keynes opposed the excessive mathematicization of economics. His another important impact on economics was to switch the focus of economic analysis from the long run to the short term. The message of "General Theory" was that government should manage demand to limit economic fluctuations. The role Keynes gave the state was essentially to reduce uncertainty and to make economy more predictable.
PurposeThis study examines the relationship between economic fluctuations and financial distress in the US agricultural sector, which is associated with a large degree of financial instability.Design/methodology/approachThe authors developed a parsimonious model of economic fluctuations in the US agricultural sector. The authors used statistical filter methods to identify the co-movement in cyclical fluctuations in real, cumulative growth rates in farm real estate values, farm sector debt and leverage.FindingsThe proposed model closely approximated the financial evolution of the US agricultural sector between 1960 and 2018. In addition, the authors proved that the proposed model is an early warning indicator of farm loan delinquencies and farm bankruptcies.Originality/valueThis study exploits recent advances in economic theory and empirical macroeconomic modeling to develop a model that is a robust predictor of financial distress in the agricultural sector. Further, the authors demonstrate that the policy interventions following the 1980s farm financial crisis demonstrate the likely long-run economic response to the policies enacted following the 2008 financial crisis.
Economic fluctuations and crime: temporary and persistent effects