Abstract
This research investigates the empirical relationship of government efficiency, corruption, and inflation regarding public debt between advanced and emerging economies. Random effects estimation is used to analyse a sample of 40 countries. The analysis results show that corruption and inflation in advanced economies have a significant and positive effect on public debt. Corruption affects public debt to increase, but on the flip side, inflation affects public debt to decrease. In emerging economies, the results show a positive impact of government efficiency on public debt. Hence, government efficiency will be considered an obstacle when a policy initiated to reduce public debt. Meanwhile, policymakers should take note countries’ corruption and inflation rates when formulating policies to reduce public debt in advanced economies.
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