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Sustainability 2017, 9(3), 433; doi:10.3390/su9030433

Public Debt, Corruption and Sustainable Economic Growth

1
Gender Budget Research Center, Korea Women’s Development Institute, Seoul 03367, Korea
2
Graduate School of Energy and Environment, Korea University, Seoul 02841, Korea
3
Graduate School of Public Administration and the Korea Institute of Public Affairs, Seoul National University, Seoul 08826, Korea
*
Author to whom correspondence should be addressed.
Received: 13 December 2016 / Revised: 20 February 2017 / Accepted: 23 February 2017 / Published: 15 March 2017
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Abstract

There are many studies that look into the relationship between public debt and economic growth. It is hard to find, however, research addressing the role of corruption between these two variables. Noticing this vacancy in current literature, we strive to investigate the effect of corruption on the relationship between public debt and economic growth. For this purpose, the pooled ordinary least squares (OLS), fixed effects models and the dynamic panel generalized method of moments (GMM) models (Arellano-Bond, 1991) are estimated with data of 77 countries from 1990 to 2014. The empirical results show that the interaction term between public debt and corruption is statistically significant. This confirms the hypothesis that the effect of public debt on economic growth is a function of corruption. The sign of the marginal effect is negative in corrupt countries, but public debt enhances economic growth within countries that are not corrupt, i.e., highly transparent. View Full-Text
Keywords: public debt; economic growth; corruption; institution public debt; economic growth; corruption; institution
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Kim, E.; Ha, Y.; Kim, S. Public Debt, Corruption and Sustainable Economic Growth. Sustainability 2017, 9, 433.

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