Rue de la Banque no. 13: How fiscal policy affects the price level: lessons from a not so distant past

The last decade has witnessed large-scale debt accumulation in a number of developed countries. Such increases in debt levels raise questions about the sustainability of public finances and risks of debt monetisation. Using Britain during the Napoleonic Wars as a case study, the author provides evidence on how expectations regarding the sustainability of public finances can affect the price level under extraordinary circumstances.