Police spending and economic stabilization in a monetary economy with crime and differential human capital

Lim, K.Y. ORCID: 0000-0003-1978-176X and Jia, P., 2019. Police spending and economic stabilization in a monetary economy with crime and differential human capital. Nottingham: Nottingham Trent University.

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Abstract

This paper presents a dynamic model with crime, differential human capital, credit market imperfection, and police spending to examine the role of the latter in stabilizing shock arisen from formal educational quality uncertainty. Based on a stylized parameterization, we find formal and illegal human capital accumulation to share a common cyclical property. There is a case for the use of a rule-based approach to police spending as it smoothens out the fluctuations arisen from formal educational uncertainty, while contributing to a "decoupling" of the two types of human capital. This nonetheless comes with a cost of greater propagation of the financial accelerator effect due to credit market imperfection, and therefore necessitates the use of a supplementary monetary smoothing regime to negate these negative effects.

Item Type: Working paper
Description: Discussion papers in economics; no. 2019/2
Creators: Lim, K.Y. and Jia, P.
Publisher: Nottingham Trent University
Place of Publication: Nottingham
Date: January 2019
Number: 2019/2
ISSN: 1478-9396
Identifiers:
NumberType
1204652Other
Divisions: Schools > Nottingham Business School
Depositing User: Jonathan Gallacher
Date Added: 07 Nov 2019 11:23
Last Modified: 07 Nov 2019 11:23
Related URLs:
URI: http://irep.ntu.ac.uk/id/eprint/38139

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