UNEMPLOYMENT, POVERTY, INFLATION AND CRIME NEXUS: COINTEGRATION AND CAUSALITY ANALYSIS OF PAKISTAN

Abstract

This study is designed to investigate the relationship between crime and various economic indicators such as unemployment, poverty and inflation in Pakistan. The study covers the period for 1975-2007. The stationary properties of the time series data are examined by using Augmented Dickey-Fuller (ADF) test. Johansen Maximum Likelihood Cointegration and Granger Causality tests are applied to find out long-run relationship along with causality among the variables. The findings of the tests provide evidence of the existence of long-run cointegration relationship among crime, unemployment, poverty and inflation. The Granger causality has been tested through Toda-Yamamoto procedure. The causality results show that crime is Granger caused by unemployment, poverty and inflation in Pakistan.