The Effect of Government Debt on Private Investment in Advanced Economies: Does Institutional Quality Matter?

IF 0.9 Q3 ECONOMICS

Scientific Annals of Economics and Business Pub Date : 2022-03-16 DOI:10.47743/saeb-2022-0006

Van Nguyen

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引用次数: 0

Abstract

Unlike developing economies, advanced economies easily borrow debt to finance budget deficits. Government debt is one of the active measures of fiscal policy in these economies to run the economy and overcome its cyclicality. Most related studies note that government debt reduces private investment. Does it hold for advanced economies? Does institutional quality significantly affect the government debt – private investment relationship in these economies? For the answer, the study applies the PMG estimator (PMG) and the two-step difference GMM Arellano & Bond estimator (D-GMM) to investigate the impacts of government debt, institutional quality, and their interaction on private investment in 36 advanced economies from 2002 through 2019. The estimated results report that government debt crowds out private investment, while institutional quality enhances it. However, their interaction crowds out it. It seems counter-intuitive. Besides, economic growth and trade openness increase private investment while inflation decreases it. These results indicate the crucial implications for central governments in advanced countries in using and managing government debt.

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发达经济体政府债务对私人投资的影响:制度质量重要吗?

与发展中经济体不同，发达经济体很容易通过举债来弥补预算赤字。政府债务是这些经济体财政政策的积极措施之一，以管理经济并克服其周期性。大多数相关研究指出，政府债务减少了私人投资。它适用于发达经济体吗？制度质量是否会显著影响这些经济体的政府债务与私人投资关系？为了得到答案，本研究应用PMG估计量（PMG）和两步差分GMM-Arellano&Bond估计量（D-GMM）调查了2002年至2019年36个发达经济体的政府债务、制度质量及其相互作用对私人投资的影响。估计结果显示，政府债务挤掉了私人投资，而机构质量提高了私人投资。然而，它们的互动挤掉了。这似乎与直觉相悖。此外，经济增长和贸易开放增加了私人投资，而通货膨胀降低了私人投资。这些结果表明，发达国家的中央政府在使用和管理政府债务方面具有重要意义。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Scientific Annals of Economics and Business ECONOMICS-

CiteScore

1.40

自引率

0.00%

发文量

审稿时长

10 weeks

期刊介绍： The Journal called Scientific Annals of Economics and Business (formerly Analele ştiinţifice ale Universităţii "Al.I. Cuza" din Iaşi. Ştiinţe economice / Scientific Annals of the Alexandru Ioan Cuza University of Iasi. Economic Sciences), was first published in 1954. It is published under the care of the Alexandru Ioan Cuza University, the oldest higher education institution in Romania, a place of excellence and innovation in education and research since 1860. Throughout its editorial life, the journal has been continuously improving. Renowned professors, well-known in the country and abroad, have published in this journal. The quality of the published materials is ensured both through their review by external reviewers of the institution and by the editorial staff that includes professors for each area of interest. The journal published papers in the following main sections: Accounting; Finance, Money and Banking; Management, Marketing and Communication; Microeconomics and Macroeconomics; Statistics and Econometrics; The Society of Knowledge and Business Information Systems.