Fiscal Policy and Crime Rate in Nigeria

Abstract

The need to reduce the level of criminal activity has preoccupied the attention of policymakers which has led to the exploration of feasible, alternative routes to achieve United Nations’ Sustainable Development Goal -16. This phenomenon has been the present practice of most developing countries such as Nigeria that is inundated with higher level of crime rate. This study examines the possibility of using fiscal policy tools for crime control by employing Dynamic Ordinary Least Square (DOLS) technique on Nigerian data over a period of 1986-2019. It also examines the causal links between the variables via the Toda-Yamamoto Granger causality. The following findings emerged: (1) Expansionary fiscal policy reduces crime behaviour in Nigeria. This result is robust when public spending is used as a proxy for fiscal policy. (2) There is a one-way causality moving from crime rate to fiscal deficit. (3) There is a one way causality moving from urbanization to crime rate. (4) We find a two-way causality between inflation and fiscal deficit. In terms of policy implications, these findings suggest that fiscal policy can be used to curb crime behaviour in the developing countries.