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Results for macroeconomics

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Author: Capuano, Carlo

Title: The Macroeconomic Impact of Organized Crime: A Neo-Kaleckian Perspective

Summary: The paper analyzes how organized crime affects the economy through its impact on the effective demand, following the Neo-Kaleckian approach. From this perspective, the presence of organized crime, on the one hand, tends to reduce the effective demand draining resources through extortion, bribery of public officials and encouraging consumption of criminal goods (illegal goods and goods produced in the underground economy), on the other hand, tends to increase the effective demand using the proceeds of criminal activity in the purchase of legal consumption and investment goods. The model highlights the opposing action of these two forces and identifies the conditions for a negative impact on the degree of capacity utilization and the growth rate. For the latter, these conditions tend to be more stringent, due to the direct impact of organized crime on investment decisions. Overall, the operation of organized crime tends to negatively influence the economic activity to the extent that the income drained from the legal sector is not reused into the same sector.

Details: Naples: Department of Economics, University of Naples, 2012. 33p.

Source: Internet Resource: MPRA Paper No. 40077: Accessed July 265, 2012 at: http://mpra.ub.uni-muenchen.de/40077/1/MPRA_paper_40077.pdf

Year: 2012

Country: Italy

URL: http://mpra.ub.uni-muenchen.de/40077/1/MPRA_paper_40077.pdf

Shelf Number: 125766

Keywords:
Illegal Markets
Macroeconomics
Organized Crime