- Many economists, including Lord Keynes, advocate small fiscal deficits.
- This is to boost the economy, especially during crises.
- Government should raise public investment by investing borrowed funds.
- The purpose is to accelerate economic growth through public intervention.
- If the return on investments from borrowed funds is higher than borrowing cost, it’s fine.
- If government invests in infrastructure, future generations may benefit.
- This is provided the return on investment is greater than the interest rate.
- Growth can lead to debt sustainability if interest rate is less than growth rate.