Exploring the Relationship between Crime and Various Macroeconomic Indicators in Iran

This study aims at investigating the nature of the causal relationship between crime and various economic indicators such as unemployment, poverty and inflation in Iran using autoregressive distributed lag (ARDL) bounds testing procedure and Granger-causality within vector error correction model (VECM) based on annual data spanning the period between 1966 and 2006. Results of the ARDL bounds test provide evidence of the existence of long-run cointegration relationship among crime, unemployment, poverty and inflation. On the other hand, Granger-causality results show that crime is Granger caused by unemployment, poverty and inflation in Iran, both in the long run and in the short run. In the light of the results of this study, to prevent crimes and reduce crime rate in Iran, all the major economic determinants of crime – unemployment, inflation, GDP growth etc. are needed to be adequately addressed by the policy makers.