When there are credit-market imperfections, an increase in government debt may be advantageous because it

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Credit-market imperfections mean that some consumers may not be able to borrow as much as they would like or need. An increase in government debt can help these credit-constrained consumers by increasing the amount of available credit. This is because the government issue bonds as a way of financing the debt, and these bonds can be purchased by private investors who then lend the money to businesses and individuals in need of credit. Therefore, by increasing government debt, the government indirectly allows credit-constrained consumers to borrow more.

When There Are Credit-Market Imperfections, an Increase in Government Debt