In this paper we analyze a descriptive endogenous growth model with public

debt. The government can run into debt, but, the primary surplus is a positive

function of the debt to GDP ratio such that the debt ratio becomes a mean-reverting

process. We show that a balanced budget scenario yields a higher long-run growth

rate than a scenario with permanent deficits if and only if the public deficit exceeds

the net saving out of government bonds. As regards the dynamics, the analysis

shows that multiple balanced growth paths can arise. Further, reducing the reaction

of the primary surplus to a higher public debt can generate endogenous cycles via a

Hopf bifurcation and, for a sufficiently low reaction coefficient, the economy becomes

unstable.