In 2010 two Harvard Economists published a paper arguing that countries that had public debt to GDP ratios of over 90% experienced a sharp slowdown in growth. However, a recently published IMF paper that analyzed data from 1821 to 2012 paints a different picture. The paper explains that usually the slowdowns in growth are from factors unrelated to debt levels. If you look at average debt levels over a 15 year period, there is no evidence that countries with over 90% public debt to GDP ratios experience less growth. Countries such as post-war Britain maintained solid growth with over 200% debt to GDP. A more important indicator of growth is the debt trajectory. Countries that had rising debt ratios experienced slower growth than did countries with decreasing ratios. In addition, a new study claims that countries with rising private debt levels also experience less growth. A 2008 paper written at The University of Virginia found that the biggest predictor of financial crisis from 1870 to 2008 was rapid total credit growth. If this is true, it's good news for Europe after their debt levels stabilized in 2013. However, for China, it could spell disaster due to their credit to GDP ratio increase of over 95% from 2007 to now.
http://www.economist.com/news/finance-and-economics/21597933-new-research-suggests-debts-trajectory-affects-growth-more-its-level-breaking
I think that long-term, debts are a problem if there is not enough national saving. Look at Japan, it has extremely high levels of debt to GDP and they have had no extraordinary growth in years. They went through a decade-long recession, and couldn't get there feet under them. Another problem with debt is servicing it; the payments on interest claim a large part of revenue, so that people are paying for services others received. This can corrode the willingness of tax-payers to fund government. Furthermore, the services government could provide if it didn't have to pay interest could lead to higher GDP growth.
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