Government debt and economic growth in Malaysia: the role of institutional quality

Daud, Siti Nurazira Mohd; Podivinsky, Jan M.

doi:10.1080/13504851.2014.916378

Cited by 20 publications

(18 citation statements)

References 5 publications

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“…This result suggests that the impact of public debt burden on health expenditure is conditioned on the quality of the institutions. This conforms to the previous studies (Daud & Podivinsky, 2014;Presbitero, 2008) that argued that to a great the impact of public debt depends on the quality of the institution in the country. (.0169)** .0082 Note: The standard errors are in parenthesis and calculated as proposed by Brambor et al, (2006) ***, **, * denote 1%, 5%, and 10% levels of significance.…”

Section: Estimation Resultssupporting

confidence: 92%

“…However, the new wave of research concludes that the effective utilization of public debt depends to a great extent on the quality of the institutions in the country (Cooray, Dzhumashev, & Schneider, 2017;Daud & Podivinsky, 2014;Jalles, 2011;Kim, Ha, & Kim, 2017;Presbitero, 2008). This finding suggests that only a country with good institutions is better able to manage and use her debt efficiently.…”

Section: Introductionmentioning

confidence: 99%

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Relationship between Public Debt Burden and Health Expenditure in Sub-Saharan African Countries: The Role of Institutional Quality

Said

Morai

2020

JBSEE

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The historically lower level of public health expenditure of sub-Saharan African (SSA) countries could be partly explained by the mounting debt burden of this region. This consumes a sizable proportion of their domestic resources to debt servicing and potentially decreases their overall budgetary allocations to various sectors in the economy and health expenditure in particular. Using the Generalized Method of Moments (GMM) approach on a sample of 43 sub-Saharan African countries, we examined the relationship between the public debt burden and health expenditure highlighting the role of institutional quality for the period 2000 – 2014. The empirical result confirms that the relationship between public debt burden and health expenditure in sub-Saharan Africa is negative. Interestingly, however, the marginal effect of the relationship between the public debt burden and health expenditure has shown that such a negative relationship turns out to be positive when the quality of the institutions is at maximum. This suggests that the relationship between the public debt burden and health expenditure in sub-Saharan Africa is a function of institutional quality. Therefore, to minimize the negative impact of public debt on health expenditure in sub-Saharan Africa, governments should take determine stand to minimize its debt accumulation and intensify efforts toward the improvement of institutional quality in the region comprehensively.

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Section: Estimation Resultssupporting

confidence: 92%

Section: Introductionmentioning

confidence: 99%

Relationship between Public Debt Burden and Health Expenditure in Sub-Saharan African Countries: The Role of Institutional Quality

Said

Morai

2020

JBSEE

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“…Debt is irrelevant to growth if country policies and institutions do not ensure favourable environment and have an adverse effect on economic development only when a country implements good macroeconomic policies and has sound institutions. Dauda and Dauda and Podivinsky (2014), analysing the data on Malaysia, indicate that whether debt fosters or hinders economic growth, depends on the institutional quality, measured by political rights, civil liberty and economic freedom indices. The positive effect occurs when institutional quality is high enough to ensure well-functioning government, which effectively distributes and allocates the borrowed funds to high value-added sectors.…”

Section: The Role Of Institutional Quality In Debt-growth Relationshipmentioning

confidence: 99%

Growth Effect of Public Debt: The Role of Government Effectiveness and Trade Balance

Butkus

Šeputienė

2018

Economies

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A growing number of recent works support the idea of debt threshold level (turning point), above which debt starts reducing economic growth. However, estimated threshold varies sharply across studies and gives a little insight into what the optimal level of debt is. The point is that there is no single turning point that could be applied to all countries and a proper investigation is needed on factors, which shape the debt impact on growth. This study aims to investigate whether debt threshold level depends on government effectiveness (one of the aspects of countries’ institutional quality) and trade balance. Our SYS-GMM estimates (and alternatively OLS and LSDV for robustness check) are based on the unbalanced panel of 152 countries over the period of 1996–2016 and on two strategies: (i) splitting of sample into subsamples according to trade balance and government effectiveness and (ii) including debt and government effectiveness, debt and trade deficit interactions. The obtained results are in line with those which confirm inverted U-shaped debt-growth relationship with clear debt turning point dependence on government effectiveness. However, effective governance is not enough to avoid the negative debt effect. Trade balance seems to be more crucial factor than institutional quality, on which threshold level depends.

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“…Despite this lack of consensus, managing debt is critical, since it also involves risks and costs, and paying-off debt simultaneously. Seminal work on the sources of growth, including the Solow model, and the endogenous growth model and its extensions, assume that distributive policies and institutional quality are in place for income to converge (Law et al, 2018;Daud and Podivinsky, 2014;Law et al, 2013). Relevant institutions playing their role in the regulatory framework could lower the probability of a debt overhang (Imbs and Ranciere, 2005).…”

Section: Introductionmentioning

confidence: 99%

External Debt, Institutional Quality and Economic Growth

Daud¹

2020

BEMP

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This paper addresses the gap in the literature by investigating the role of the institutional quality in the nexus of external debt and economic growth. By employing a dynamic panel data analysis, we found that the institutional quality plays some role in complementing the effect of external debt on a country’s economic growth. We also found that the negative effect of external debt and a country’s economic growth monotonically increases with the level of institutional indicator, which implies the possibility of debt overhang may still happen in economies endowed with good institutions, but for higher values of debt.

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Government debt and economic growth in Malaysia: the role of institutional quality

Cited by 20 publications

References 5 publications

Relationship between Public Debt Burden and Health Expenditure in Sub-Saharan African Countries: The Role of Institutional Quality

Relationship between Public Debt Burden and Health Expenditure in Sub-Saharan African Countries: The Role of Institutional Quality

Growth Effect of Public Debt: The Role of Government Effectiveness and Trade Balance

External Debt, Institutional Quality and Economic Growth

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