<p>Look at the implicit price deflator for GDP. Using the annual series, 1946=11.05, 1956=15.32, so 38.6% increase. (Source: <a href="https://fred.stlouisfed.org/graph/?g=qMay" rel="nofollow noreferrer">FRED database</a>)</p>

<p>I don’t have time to look at the paper, but that’s possibly what was meant. Not an entirely convincing methodology, but you would have to do something with the deflator as well as nominal GDP to allocate changes.</p>

CC BY-SA 4.0
2020-04-22T01:14:12.003Z
2020-04-22T01:14:12.003Z
Brian Romanchuk
<p>As double-check, using data from <a href="https://sep.luiss.it/sites/sep.luiss.it/files/Policy%20Brief%20-%20Bernardini,%20Cottarelli,%20Galli,%20Valdes.pdf" rel="nofollow noreferrer">Bernardini et al.</a>, for the US, they report 3.4% average inflation and 3.7% (average) real GDP growth over a 28-year period ('46-'74), so that's about 47.8% "contribution" of inflation in this sense. 
<a href="https://i.sstatic.net/GOip0.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/GOip0.png" alt="enter image description here"></a></p>

<p>(Bernardini et al. report CPI inflation <a href="https://www.bls.gov/opub/mlr/2016/article/comparing-the-cpi-with-the-gdp-price-index-and-gdp-implicit-price-deflator.htm" rel="nofollow noreferrer">rather</a> than the GDP deflator.)</p>

CC BY-SA 4.0
2020-04-22T14:45:41.017Z
2020-04-22T14:45:41.017Z
fantastic peace and prosperity
<p>I'm trying to figure out how much inflation (vs GDP growth) shrank the debt-to-GDP ratio (in the decade or so) post-WW2 in the US. I found <a href="https://economics.ucsc.edu/research/downloads/using-inflation-to-erode-debt-nov27-09.pdf" rel="nofollow noreferrer">one paper</a> that says:</p>

<blockquote>
  <p>In 1946, the debt ratio was 108.6
  percent. Inflation reduced this ratio about 40 percent within a decade. [...]</p>
  
  <p>In 1946, just after the end of World War II, gross Federal debt reached
  121.7 percent of GDP and the share held by the public was 108.6 percent. Over the next 30
  years, debt as a percentage of GDP decreased almost every year, due primarily to an expanding
  economy as well as inflation. </p>
</blockquote>

<p>But how much was due the expanding economy and how much due to inflation? (Is that 40% from the abstract <em>just</em> due to inflation?)</p>

<macroeconomics><inflation><gdp><government-debt><united-states>
Inflation vs GDP growth as factors driving down the US debt-to-GDP ration post-WW2
fantastic peace and prosperity
# Inflation vs GDP growth as factors driving down the US debt-to-GDP ration post-WW2

(Asked by: username_0 on 2020-04-22)

I'm trying to figure out how much inflation (vs GDP growth) shrank the debt-to-GDP ratio (in the decade or so) post-WW2 in the US. I found [one paper](https://economics.ucsc.edu/research/downloads/using-inflation-to-erode-debt-nov27-09.pdf) that says:

> In 1946, the debt ratio was 108.6
> percent. Inflation reduced this ratio about 40 percent within a decade. [...]
>
> In 1946, just after the end of World War II, gross Federal debt reached
> 121.7 percent of GDP and the share held by the public was 108.6 percent. Over the next 30
> years, debt as a percentage of GDP decreased almost every year, due primarily to an expanding
> economy as well as inflation.

But how much was due the expanding economy and how much due to inflation? (Is that 40% from the abstract *just* due to inflation?)

**Tags:** macroeconomics, inflation, gdp, government-debt, united-states


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## 2 answers

### Answer by username_1 on 2020-04-22. Score: 2

Look at the implicit price deflator for GDP. Using the annual series, 1946=11.05, 1956=15.32, so 38.6% increase. (Source: [FRED database](https://fred.stlouisfed.org/graph/?g=qMay))

I don’t have time to look at the paper, but that’s possibly what was meant. Not an entirely convincing methodology, but you would have to do something with the deflator as well as nominal GDP to allocate changes.


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### Answer by username_0 on 2020-04-22. Score: 0

As double-check, using data from [Bernardini et al.](https://sep.luiss.it/sites/sep.luiss.it/files/Policy%20Brief%20-%20Bernardini,%20Cottarelli,%20Galli,%20Valdes.pdf), for the US, they report 3.4% average inflation and 3.7% (average) real GDP growth over a 28-year period ('46-'74), so that's about 47.8% "contribution" of inflation in this sense.
[![enter image description here](https://i.sstatic.net/GOip0.png)](https://i.sstatic.net/GOip0.png)

(Bernardini et al. report CPI inflation [rather](https://www.bls.gov/opub/mlr/2016/article/comparing-the-cpi-with-the-gdp-price-index-and-gdp-implicit-price-deflator.htm) than the GDP deflator.)


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