Why it is dangerous to increase the public debt even when the long-term interest rate is lower than growth

One common argument 1 is that when long-term interest rates are lower than the growth rate, the public debt can be increased to finance public spending needs (i.e. to carry out an intergenerational transfer in favour of the present). But in reality, even in this configuration, it can be dangerous to increase the public debt: Of course, long-term interest rates can rise in the future (less expansionary monetary policy, decline in savings, a potentially self-fulfilling rise in sovereign risk premia) and the debt will have to be rolled over before it is repaid; Uncertainty about future production brings uncertainty about future fiscal deficits (primary fiscal surpluses), which requires the addition of a risk premium on top of the long-term interest rate; One has to think in terms of utility: if the level of activity is high in the short term and weaker in the long term, the marginal utility of additional income is lower in the short term than in the long term, and so debt should not be increased in the short term. This configuration is plausible given population ageing. 1 See for example Olivier Blanchard (2019), “Public Debt and Low Interest Rates”, American Economic Review, vol. 109, n o. 4.