High debt countries face limited stimulus impact from fiscal policies.
Fiscal stimulus can have mixed effects in a high-debt economy. Increasing public spending can give a short boost, but raising interest rates can reduce the impact. Delays in public investment can help lower debt levels, but too much spending can worsen the fiscal situation. Adjusting taxes quickly in response to debt can lead to larger government spending benefits. The decision to use stimulus measures depends on a country's debt level, the tools used, how quickly debt is paid off, and the goals of the policies.