Template-Type: ReDIF-Paper 1.0
Author-Name: King Yoong Lim 
Author-Name: Pengfei Jia
Title: Police spending and economic stabilization in a monetary economy with crime and differential human capital
Abstract: This paper presents a dynamic model with crime, differential human capital, credit market imperfection, and police spending to examine 
the role of the latter in stabilizing shock arisen from formal educational quality uncertainty. 
Based on a stylized parameterization, we find formal and illegal human capital accumulation to share a common cyclical property. 
There is a case for the use of a rule-based approach to police spending as it smoothens out the fluctuations arisen from formal educational uncertainty, 
while contributing to a decoupling of the two types of human capital. 
This nonetheless comes with a cost of greater propagation of the financial accelerator effect due to credit market imperfection, 
and therefore necessitates the use of a supplementary monetary smoothing regime to negate these negative effects.
File-URL: http://www.ntu.ac.uk/__data/assets/pdf_file/0033/792177/police-spending-economic-stabilization.pdf
File-Format: Application/pdf
File-Function: First version, 2019
Creation-Date: 2019-01
Classification-JEL: H39, H50, K42, E44, E61
Keywords: Crime, Credit Imperfection, Financial Accelerator, Human Capital Investment, Police Spending
Handle: RePEc:nbs:wpaper:2019/02