This paper concerns an aspect of the question: When do government deficits matter? My original intent was to sketch out as a starting point the extension of previous work (1981) showing how endogenously generated deficits might have no real effect, a result obtained under an assumption of perfect substitutability between government and private debt, to a world of risky debt where the latter assumption would no longer hold. My intuition was that the extension would go through in a straightforward way. As it turns out, the extension is not quite as direct as I had expected, and I think the difference may be of some general interest. In particular, the conditions for neutrality seem less likely to be fulfilled in a practical context
