The Politics of Fiscal Responsibility: A Comparative Perspective.

If inflation is not present, then the Fed will not raise interest rates no matter how large the debt and deficits are (e.g., interest rates remained at historic lows in the years following the Great Recession despite the large build-up in federal debt). Table 1 shows a correlation between the average deficits and unemployment rates of the case countries and the United States - the higher the deficit, the lower the unemployment rate. Government deficits increase private sector wealth and enable the country to afford trade deficits, whereas government surpluses decrease private sector wealth because the private sector must give up wealth to pay for the deficit reduction. The point here is that debts and deficits in and of themselves will not lead to higher interest rates in the United States. [Extracted from the article]

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