Crime, Deterrence and the Business Cycle in New York City: A VAR Approach

A bstract-We apply a VAR (vector autoregressive) technique to estimate the interrelationships between unemployment, arrests, police, demographics, and property-related felony crimes in New York City from 1970 to 1984. Despite the limitations of using a VAR, the technique provides a useful alternative to more standard models in analyzing what causes crime. The study concludes that arrests provide a strong deterrent to crimes. But, the reverse effect of crime on arrests, is extremely small. We find a brief and relatively weak effect of changes in unemployment rates on crime. Changes in demographics are associated with relatively stronger changes in crime rates