''In sum, we have found surprisingly little evidence to support the classical view that rising debt levels systematically drive higher inflation.''

“In sum, we have found surprisingly little evidence to support the classical view that rising debt levels systematically drive higher inflation.¹⁶ If anything, the data for the advanced economies suggest that heavier debt burdens have brought lower inflation and slower GDP growth in recent decades. The cost of high debt is not inflation but may instead be disinflation and weak economic performance, apparently reflecting increased uncertainties for the private sector and the risk of fiscal austerity.”

¹⁶ Consistent with this finding, BoE Deputy Governor Ben Broadbent recently observed that for the UK over the past three hundred years: “The correlation between public-sector indebtedness and inflation—whether that’s measured contemporaneously of after the event—is zero.” See “Government Debt and Inflation,” September 2020.