Are Crime Rates Really Stationary?

Many empirical studies of the economics of crime focus solely on the determinants thereof, and do not consider the dynamic and cross-sectional properties of their data. As a response to this, the current paper offers an in-depth analysis of this issue using data covering 21 Swedish counties from 1975 to 2008. The results suggest that the four crime types considered are non-stationary, and that this cannot be attributed to county specific disparities, but rather that it is due to a small number of common stochastic trends to which clubs of counties tend to revert. The results further suggest that these trends can be given an macroeconomic interpretation. These findings are consistent with recent theoretical models predicting that crime should be dependent across both time and counties.