Crime as a moderator of economic growth: evidence from the U.S

This study examines how cybercrime, terrorism, property crime, and violent crime affect economic growth in the United States through macroeconomic transmission channels. Using 168 quarterly observations, the analysis applies a Two-Stage Least Squares approach combined with a robust Nonlinear Autoregressive Distributed Lag model to address endogeneity and capture dynamic asymmetries. Results indicate that crime significantly affects consumer sentiment (CS), criminal justice spending (CJS), and labour participation rate (LPR), reflecting behavioural responses by households, governments, and businesses. Effects vary across crime types, with all crime types reducing CS, while property crime and violent crime exert most sensitive shocks to CJS and LPR. The findings further show that crime conditions the transmission of economic agents’ behavioural responses into economic growth through CS, CJS, and LPR. Overall, the study highlights crime as a structural determinant shaping macroeconomic behaviour and gross domestic product dynamics.