<p>
Title: The effects of public debt, corruption on economic growth in countries in the
world
Abstract: Nowadays, loan borrowing has almost become an inevitable trend in the
national financial structure of any country. However, the use of debt always exists
duality, borrowing can create conditions to promote economic growth, but the more
debt is, the more cost of debt will increase not only the benefits of borrowing
disappear, but debt also creates a drag on a country's economic growth.
Furthermore, debt is often used to finance government expenditures and this can
give rise to corruption. As based on the theories of economic growth, public debt
and corruption, this study was conducted to re-examine the impact of public debt on
economic growth, the relationship between public debt and economic growth,
nonlinear relationship between public debt and economic growth, thereby
determining the optimal debt threshold. In addition, the author also examines the
effect of corruption on the impact of public debt on economic growth. This study
uses the DGMM estimation method for data of three groups of countries in the
period 2000-2019 and has solved the research questions posed including: (1) The
relationship between public debt and economic growth is nonlinear with a debt
threshold for High income countries (HICs) of 120%; Upper middle income
countries (UMICs) is 93% and Low middle income countries (LMICs) is 67%; (2)
Corruption has a negative impact on economic growth for UMICs and LMICs, but
the opposite is true for HICs; (3) The impact of public debt on economic growth is a
function of corruption, the positive effect of public debt decreases as the perceived
level of corruption increases. This result is used as a reference for policy makers to
fully exploit the benefits brought by the use of public debt and minimize the
negatives arising from it. At the same time it is also a reference for scholars
interested in this topic in the future.
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