Unlike developing economies, advanced economies easily borrow debt to finance budget deficits. Government debt is one of the active measures of fiscal policy in these economies to run the economy and overcome its cyclicality. Most related studies note that government debt reduces private investment. Does it hold for advanced economies? Does institutional quality significantly affect the government debt – private investment relationship in these economies? For the answer, the study applies the PMG estimator (PMG) and the two-step difference GMM Arellano & Bond estimator (D-GMM) to investigate the impacts of government debt, institutional quality, and their interaction on private investment in 36 advanced economies from 2002 through 2019. The estimated results report that government debt crowds out private investment, while institutional quality enhances it. However, their interaction crowds out it. It seems counter-intuitive. Besides, economic growth and trade openness increase private investment while inflation decreases it. These results indicate the crucial implications for central governments in advanced countries in using and managing government debt.

中文翻译：

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政府债务对发达经济体私人投资的影响：制度质量重要吗？

与发展中经济体不同，发达经济体很容易借债来弥补预算赤字。政府债务是这些经济体财政政策的积极措施之一，以运行经济并克服其周期性。大多数相关研究指出，政府债务会减少私人投资。它适用于发达经济体吗？制度质量是否显着影响这些经济体的政府债务-私人投资关系？为了找到答案，该研究应用 PMG 估计量 (PMG) 和两步差 GMM Arellano & Bond 估计量 (D-GMM) 来调查政府债务、制度质量及其相互作用对 36 个发达经济体私人投资的影响从 2002 年到 2019 年。估计结果显示，政府债务挤出私人投资，而制度质量提高了它。然而，他们的互动把它排挤了。这似乎违反直觉。此外，经济增长和贸易开放增加了私人投资，而通货膨胀降低了私人投资。这些结果表明，发达国家中央政府在使用和管理政府债务方面具有重要意义。