What would it take for low interest rates to allow for an increase in fiscal deficits and public debts?

It is often claimed that it is possible to conduct more expansionary fiscal policies since interest rates are low. This argument is insufficient. Admittedly, low interest rates make borrowers solvent and make it possible to have a higher public debt ratio, but this also holds for private-sector debt. For low interest rates to lead to an increase in fiscal deficits and public investments, they must go hand-in-hand with a decline in return on private capital , which makes it optimal to earmark a greater share of savings to financ e of the fiscal deficit. It is important to understand that if the return on private capital remains high despite low interest rates, they should lead to an increase in private sector - and no t public sector - investment and debt .