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Public Debt, Governance, and Growth in Developing Countries: An Application of Quantile via Moments

Author

Listed:
  • Kazi Musa

    (Accounting Research Institute (ARI), Universiti Teknologi MARA, Shah Alam 40450, Malaysia)

  • Kazi Sohag

    (Graduate School of Economics and Management (GSEM), Ural Federal University (UrFU), Yekaterinburg 620078, Russia)

  • Jamaliah Said

    (Accounting Research Institute (ARI), Universiti Teknologi MARA, Shah Alam 40450, Malaysia)

  • Farha Ghapar

    (Faculty of Accountancy, Business and Social Sciences, Kolej Universiti Poly-Tech MARA, Cheras, Kuala Lumpur 56100, Malaysia)

  • Norli Ali

    (Faculty of Accountancy, Universiti Teknologi MARA, Shah Alam 40450, Malaysia)

Abstract

Developing countries often encounter budget deficits by taking loans from internal and external sources. The effectiveness of public debt has been a long debate in the seminal and empirical literature. In this study, we investigate the effectiveness of public debt on economic growth, incorporating the role of governance in 44 developing countries. In doing so, we applied the Quantile Via Moments approach to analyze heterogeneous panel data ranging 1990–2000 considering the scale and location properties under different economic circumstances. Our results show that public debt impedes economic growth in all quantiles. Our empirical finding corroborates our proposition that in the presence of good governance, public debt promotes economic growth in the medium to higher quantiles. The empirical findings of this study confirm that governance is far more important in promoting economic growth.

Suggested Citation

  • Kazi Musa & Kazi Sohag & Jamaliah Said & Farha Ghapar & Norli Ali, 2023. "Public Debt, Governance, and Growth in Developing Countries: An Application of Quantile via Moments," Mathematics, MDPI, vol. 11(3), pages 1-13, January.
    • Handle: RePEc:gam:jmathe:v:11:y:2023:i:3:p:650-:d:1048524
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    References listed on IDEAS

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