Cycles in crime and economy: leading, lagging and coincident behaviors

In the last decades, the interest in the relationship between crime and business cycle has widely increased. It is a diffused opinion that a causal relationship goes from economic variables to criminal activities. This work aims to verify this proposition by using the dynamic factor model to analyze the common cyclical components of Gross Domestic Product (GDP) and a large set of criminal types. Italy is the case study for the time span 1991:1 - 2004:12. The purpose is twofold: on the one hand we verify if such a relationship does exist; on the other hand we select what crime types are related to the business cycle and if they are leading, coincident or lagging.The study finds that most of the crime types show a counter-cyclical behavior with respect to the overall economic performance, but only a few of them have an evident relationship with the business cycle. Furthermore, some crime offenses, such as bankruptcy, embezzlement and fraudulent insolvency, seem to anticipate business cycle, in line with recent global events.