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This paper studies the transmission of crime shocks to the economy in a sample of 32 Mexican states over the period from 1993 to 2012. The paper uses a panel structural VAR approach which accounts for the heterogeneity of the dynamic state level responses in GDP, FDI and international migration flows, and measures the transmission via the impulse response of homicide rates. The approach also allows the study of the pattern of economic responses among states. In particular, the percentage of GDP devoted to new construction and the perception of public security are characteristics that are shown to be associated with the sign and magnitude of the responses of economic variables to crime shocks.

Business. --- Crime -- Economic aspects -- Mexico. --- Mexico -- Economic conditions -- 1982. --- Mexico -- Social conditions -- 1982. --- Social Welfare & Social Work --- Social Sciences --- Criminology, Penology & Juvenile Delinquency --- Econometrics --- Exports and Imports --- Criminology --- Emigration and Immigration --- Macroeconomic Analyses of Economic Development --- Formal and Informal Sectors --- Shadow Economy --- Institutional Arrangements --- Economywide Country Studies: Latin America --- Caribbean --- Regional Economic Activity: Growth, Development, and Changes --- Illegal Behavior and the Enforcement of Law --- International Investment --- Long-term Capital Movements --- International Migration --- Time-Series Models --- Dynamic Quantile Regressions --- Dynamic Treatment Effect Models --- Diffusion Processes --- State Space Models --- Crime & criminology --- Finance --- Econometrics & economic statistics --- Migration, immigration & emigration --- Crime --- Foreign direct investment --- Migration --- Structural vector autoregression --- Vector autoregression --- Balance of payments --- Population and demographics --- Econometric analysis --- Crime--Economic aspects --- Investments, Foreign --- Emigration and immigration --- Mexico