We analyze effects of public debt in a basic endogenous growth model with

productive public spending. We demonstrate that a discretionary policy violates

the inter-temporal government budget constraint along a balanced growth path.

A balanced government budget gives a unique saddle point stable growth path.

With a rule based policy, two saddle point stable balanced growth paths can occur,

depending on the inter-temporal elasticity of substitution of consumption and on

the primary surplus policy. Higher debt goes along with smaller long-run growth

and we derive a condition such that a deficit financed increase in public spending

raises the growth rate.