Motivated by a seemingly persistent “twin‐high” phenomenon in Latin America, we present a novel theoretical framework that has linkages between three institutions (education, criminal justice, and credit) to study policy‐pertinent research questions with regards to whether police spending has the potential to serve as an unconventional policy tool for macroeconomic management. Based on a stylized parameterization, we find formal and illegal human capital to share common cyclical properties, which can be "decoupled" under a rule‐based regime to police spending. This nonetheless comes at a cost of a greater propagation of the credit friction‐induced financial accelerator effect.

中文翻译：

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在信贷市场不完善的新凯恩斯经济中，警察支出的稳定作用

受拉丁美洲看似持续存在的“双高”现象的影响，我们提出了一个新颖的理论框架，该框架在三个机构（教育，刑事司法和信贷）之间建立了联系，以研究与政策相关的研究问题，例如警察支出是否具有作为宏观经济管理非常规政策工具的潜力。基于程式化的参数化，我们发现正式和非法的人力资本共享共同的周期性属性，这些属性可以在基于规则的体制下与警察支出“分离”。然而，这是以信贷摩擦引起的金融加速器效应更大程度传播为代价的。