Public Debt and Economic Stability, the Moderating Effect of Governance: Evidence from SEA Countries
Tuyen Le Nam （ University of Economics and Law, Ho Chi Minh City, Vietnam and Vietnam National University, Ho Chi Minh City, Vietnam ）
Tam Phan Huy （ University of Economics and Law, Ho Chi Minh City, Vietnam and Vietnam National University, Ho Chi Minh City, Vietnam ）
https://doi.org/10.37155/2972-4813-gep0303-6Abstract
This research examines the relationship between public debt, economic stability, and governance in Southeast Asian (SEA) countries, focusing on how governance quality moderates the impact of public debt on GDP growth and inflation. Using the System Generalized Method of Moments (GMM) on panel data of yearly data collected from Worldbank databank from 1960 to 2023, the study finds that while public debt can contribute positively to economic growth, its effectiveness is highly dependent on governance quality. Specifically, strong regulatory frameworks, political stability, rule of law, and control of corruption significantly influence the economic outcomes of public debt. The findings highlight that improved governance not only mitigates the inflationary pressures of public debt but also enhances its positive effects on growth. The research underscores the importance of strengthening governance structures in SEA countries to maximize the benefits of public debt and ensure sustainable economic stability. Future studies are recommended to explore additional governance factors and the differential impacts of domestic and external debt.
Keywords
Public Debt; Economic Stability; Governance; Southeast Asia; GMMFull Text
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Copyright © 2025 Tuyen Le Nam, Tam Phan Huy
Publishing time:2025-07-28
This work is licensed under a Creative Commons Attribution 4.0 International License
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