Unveiling the socio-economic toll of cybercrime: evidence from South Korea

Abstract This study employs Bayesian estimation and impulse response functions to examine the macroeconomic effects of cybercrime, with a specific focus on the South Korean economy. The analysis shows that cyberattacks disrupt key economic variables, including household consumption, firm productivity, and returns on capital. The findings also highlight the critical role of government investment in cybersecurity, demonstrating that such measures not only mitigate the adverse short-term impacts of cybercrime but also enhance long-term resilience by improving productivity and supporting growth in both wages and capital returns. By extending the existing literature, the study quantifies the relative contributions of technology shocks, cybercrime shocks, and government investment shocks to economic fluctuations, offering theoretical insights into the persistence and transmission of cyber threats. The results further provide policy-relevant implications, indicating that stronger cybersecurity legislation and more effective cross-sector coordination can reduce economic losses and reinforce stability in digitally intensive economies such as South Korea.