There is room for a debt-financed expansion of the U.S. economy under President-elect Donald Trump, especially if his increased fiscal spend is allotted towards promoting economic growth, renowned investor Mohamed El-Erian has told CNBC.
Allianz's chief economic adviser and the current chair of President Barack Obama's Global Development Council said Trump's plan to boost fiscal spend through a ramp-up in debt has the potential to work if executed correctly.
"Debt sustainability is a ratio. Yes there is debt and debt service up here but below is the ability to grow the economy, the ability to generate income," El-Erian explained to CNBC Wednesday on the outskirts of the Arab Strategy Forum in Dubai.
"The hope is that through infrastructure spending you actually increase the growth rate and increase income," he added.