For the time being, OECD countries are avoiding all the drawbacks of high public debt

The public debt ratio in OECD countries is now very high on average. Yet, we cannot see the drawbacks of high public debt: There is no speculative attack on these countries’ bonds, or they are brief (Italy in 2018), thanks to the fact that interest rates are lower than growth rates which ensures fiscal solvency; There is no crowding-out of private investment, thanks to the expansionary monetary policy that prevents long-term interest rates from rising; There is no Ricardian neutrality, which would lead to a rise in the savings rate because of expectations of an tax increase in the future . But such a tax increase will not be necessary since interest rates are lower than growth, which ensures fiscal solvency.