Is there any scenario under which it is beneficial to have a national debt? Why?

Question

Explain positive/negative aspects

Answer 1

Political reasons like "we'll cancel x amount off your debt, if you do this." Also, it's national debts that keeps the economies going because of interest rates.

Answer 2

There are many ways to look at this problem...

You can start with the notion of Ricardian equivalence: the effect of an additional dollar borrowed to finance budget deficit is the same as the effect of an additional dollar raised in taxes. So the choice between taxes and national debt is purely political. If you want to put in place a spending program, but lack political capital to finance it out of tax revenues, you can attempt to finance it through borrowing.

Alternatively, you may recall that interest rate on government bonds (which are default-free) is an important benchmark, which is good to have. Moreover, some countries (most notably, U.S. and UK) have inflation-indexed government bonds, which allows financial markets to benchmark the real interest rate...

Answer 3

War and national debts can have benefits such as cancellation and rebuilding from nothing. Debt can help get countries started and grow. But the problem is that countries usually borrow too much and then face a financial crisis such as the Asian Crisis or .com bubble, etc. Interest rates are used to control this, and differ from country to country.