Do enlarged fiscal deficits cause inflation? The historical record

In this paper we survey the historical record for over two centuries on connection between expansionary fiscal policy and inflation. As a backdrop, briefly lay out several theoretical approaches to effects of deficits inflation: earlier Keynesian monetarist approaches; modern incorporating expectations forward looking behavior: unpleasant arithmetic theory price level.We find that relationship inflation generally holds in wartime when fiscally stressed governments resorted tax. There were peacetime episodes early twentieth century bond financed unbacked by future taxes seem have greatly contributed France 1920s recovery from Great Recession 1930s U.S. post-World War II era detailed examination Inflation 1960s 1970s U.K. suggests influences monetary was key factor. Finally contrast experience Financial Crisis 2007-2008, both did not lead rising inflation, with recent pandemic, which may involve risks dominance