A New Zealand study of association between crime and the state of the economy

The aim of this thesis is to investigate whether there are associations between economically motivated crimes and macroeconomic variables. Economically motivated crimes include burglary, fraud and theft. Non-traffic offences are used as the measurement of overall crime levels, and an association between non-traffic offences and macroeconomic variables is analysed as well. Forecasting the number of people charged with burglary, fraud, theft and non-traffic offences is another objective of this thesis. Association between economically motivated crimes and the unemployment rate is also analysed at a regional level.  Methods used in this thesis include Vector Autoregressive (VAR) models, Vector Error Correction Models (VECM) and Autoregressive Integrated Moving Average (ARIMA) models. VECM and VAR models are used to produce Granger-Causality tests and impulse responses in order to summarise the associations between crimes and macroeconomic variables. All modelling methods are used to generate forecasts.  The conclusion from this thesis is that there are associations between crime and some macroeconomic variables at a national level. The biggest impact on crime is its own value in the past. The impact of macroeconomic variables is minor, and this makes the sign of the impact less important. In fact, the sign of the impact is hard to conclude because it moves between positive and negative in different periods. At a national level, the growth rate of unemployment causes the growth rate of burglary, theft and non-traffic charges. The association between unemployment and crime becomes insignificant once all macroeconomic variables are included. Overall, the growth rate of personal weekly average income or household debt and disposable income ratio (both measuring personal or household financial condition) causes an increase in the growth rate of burglary, theft and non-traffic charges. Movement of inflation causes an increase in the growth rate of fraud charges. At a regional level, growth in the unemployment rate causes an increase in theft charges in Auckland and Northland. In Nelson/Marlborough/West Coast, growth in the unemployment rate causes growth in burglary charges and vice versa. Growth in the unemployment rate causes growth in the rate of fraud charges, but this is found in Northland only. Forecasts produced by this study suggest that the number of people charged with burglary, theft, fraud and non-traffic offences will continue to decrease up until 2019, but at a lower rate of reduction.