The higher the differential between the interest rate and growth, the greater the build-up of government debt as a percentage of the economy over time. And so the more difficult it is to ensure that the debt remains on a sustainable path in the long run.
Conversely, higher economic growth and/or a lower real interest rate reduce ‘r minus g’ and thereby make it easier for governments to remain solvent. The conduct of monetary policy not only influences the cost, but also the effectiveness of fiscal policy.