We already have the pre-conceived notion that government debt is bad. Now there is a new study that shows that government debt is indeed bad--at least in the European Union setting.
In their latest working paper from the European Central Bank entitled, "The Impact of High and Growing Government Debt on Economic Growth: An Empirical Investigation for the Euro Area," Cristina Checherita and Philipp Rother have even put some figures to show how bad it is:
"This paper investigates the average impact of government debt on per-capita GDP growth in twelve euro area countries over a period of about 40 years starting in 1970. It finds a non-linear impact of debt on growth with a turning point—beyond which the government debt-to-GDP ratio has a deleterious impact on long-term growth—at about 90-100% of GDP. Confidence intervals for the debt turning point suggest that the negative growth effect of high debt may start already from levels of around 70-80% of GDP, which calls for even more prudent indebtedness policies."
My Masters in Development Economics paper actually dealt with how the level of Philippine government debt has starting to become a danger to monetary policy, making it ineffective in boosting the economy during recessions (a'la Thomas Sargent and Neil Wallace's "Unpleasant Monetary Arithmetic"). So in that case, government debt is ex post, or "reactive," if you will.
This time, government debt is attacking head on. It doesn't wait for recessions in making monetary policy ineffective. It has become more proactive and is maybe actually causing the recessions.