The recent global financial crisis has brought the attention of analysts and policymakers back to the role of fiscal policy during the crisis and its aftermath. Several important questions need to be addressed: What is the relationship between levels of public debt and economic growth? What are the causes of high debt and deficits—loose fiscal policy or weak economic growth? What is the size of fiscal multipliers, and how do they depend on business cycle conditions? Is there a risk of fiscal dominance? How can we reduce a debt overhang and achieve a smoother deleveraging from high debt ratios? What is the optimal pace of fiscal consolidation? The question of fiscal policy is a critical one, so I will to try to answer these questions.