Institutional Quality and Public Debt Accumulation: Empirical Evidence from OECD Countries

Document Type : Original Article

Authors
Ehsan Rajabi 1
Hojat Ghasemi Ghaleh 2
1 Assistant Professor, Agricultural Planning, Economic and Rural Development Research Institute (APERDRI). Tehran. Iran
2 Islamic Azad University of Isfahan
10.22047/hsd.2025.516450.1072
Abstract
The aim of this paper is to examine the relationship between institutional quality and public debt at the level of OECD member countries. The hypotheses of this study were tested using institutional quality data at the level of 36 OECD member countries during the years 2004 to 2016 using dynamic panel data and generalized moments method (GMM). The data are taken from the World Bank, International Monetary Fund and Global Governance Index databases. The results of this study show that the factors of regulatory quality indicators, right to comment and accountability and control of corruption have a significant and negative relationship and the rule of law has a positive and significant relationship with public debt, while government effectiveness, political stability and absence of violence/terrorism do not have a significant impact on public debt. Based on the findings, poor institutional quality at the country level creates significant market risk, as it indicates the presence of an unfavorable economic situation that increases public debt. Unlike previous studies, the present study will be a pioneer in increasing public insight into the impact of institutional quality on public debt in OECD member countries. The findings have important implications for policymakers, as they suggest that better control of corruption and increased regulatory quality are possible tools for containing public debt in advanced economies.
Keywords
Governance
Public Debt
OECD Member Countries
Institutional Quality
GMM
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Development of humanities
Volume 6, Issue 12 - Serial Number 12
Humanities
Volume 6, Autumn and Winter 2025-2026, No. 12
March 2026
Pages 89-107