TY  - BOOK
AU  - Acalin,Julien
AU  - Ball,Laurence M.
ED  - National Bureau of Economic Research.
TI  - Did the U.S. Really Grow Out of Its World War II Debt?
T2  - NBER working paper series
PY  - 2023///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
KW  - Price Level • Inflation • Deflation
KW  - jelc
KW  - Interest Rates: Determination, Term Structure, and Effects
KW  - Studies of Particular Policy Episodes
KW  - General
KW  - Debt • Debt Management • Sovereign Debt
N1  - August 2023; Hardcopy version available to institutional subscribers
N2  - The fall in the U.S. public debt/GDP ratio from 106% in 1946 to 23% in 1974 is often attributed to high rates of economic growth. This paper examines the roles of three other factors: primary budget surpluses, surprise inflation, and pegged interest rates before the Fed-Treasury Accord of 1951. Our central result is a simulation of the path that the debt/GDP ratio would have followed with primary budget balance and without the distortions in real interest rates caused by surprise inflation and the pre-Accord peg. In this counterfactual, debt/GDP declines only to 74% in 1974, not 23% as in actual history. Moreover, the ratio starts rising again in 1980 and in 2022 it is 84%. These findings imply that, over the last 76 years, only a small amount of debt reduction has been achieved through growth rates that exceed undistorted interest rates
UR  - https://www.nber.org/papers/w31577
UR  - http://dx.doi.org/10.3386/w31577
ER  -