The stabilization role of police spending in a neo‐Keynesian economy with credit market imperfections

Jia, P. and Lim, K.Y. ORCID: 0000-0003-1978-176X, 2020. The stabilization role of police spending in a neo‐Keynesian economy with credit market imperfections. Scottish Journal of Political Economy. ISSN 0036-9292

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Abstract

Motivated by a seemingly persistent 'twin‐high' phenomenon in Latin America, we present a novel theoretical framework that has linkages between three institutions (education, criminal justice, and credit) to study policy‐pertinent research questions with regards to whether police spending has the potential to serve as an unconventional policy tool for macroeconomic management. Based on a stylized parameterization, we find formal and illegal human capital to share common cyclical properties, which can be "decoupled".under a rule‐based regime to police spending. This nonetheless comes at a cost of a greater propagation of the credit friction‐induced financial accelerator effect.

Item Type:	Journal article
Publication Title:	Scottish Journal of Political Economy
Creators:	Jia, P. and Lim, K.Y.
Publisher:	Wiley
Date:	8 June 2020
ISSN:	0036-9292
Identifiers:	Number Type 10.1111/sjpe.12258 DOI 1341567 Other
Divisions:	Schools > Nottingham Business School
Record created by:	Linda Sullivan
Date Added:	06 Jul 2020 13:07
Last Modified:	06 Jul 2020 13:07
URI:	http://irep.ntu.ac.uk/id/eprint/40171

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