The macroeconomic impact of organized crime: a neo-Kaleckian perspective
Carlo Capuano and
Francesco Purificato ()
MPRA Paper from University Library of Munich, Germany
Abstract:
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.
Keywords: Neo-Kaleckian; macroeconomics; organized crime; illegal or illicit markets (search for similar items in EconPapers)
JEL-codes: E12 E2 K4 O17 (search for similar items in EconPapers)
Date: 2012-07
New Economics Papers: this item is included in nep-iue, nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:40077
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