Inflating Away the Public Debt? An Empirical Assessment

Jens Hilscher, Alon Raviv, Ricardo Reis

Research output: Contribution to journalArticlepeer-review

7 Scopus citations


This paper proposes a new method for measuring the impact of inflation on the real value of public debt. The distribution of debt debasement is based on two inputs: the distribution of privately held nominal debt by maturity, for which we provide new estimates, and the distribution of risk-adjusted inflation dynamics, for which we provide a novel copula estimator using options data. We find that inflation by itself is unlikely to lower the U.S. fiscal burden significantly because debt is concentrated at short maturities and perceived inflation shocks have little short-run persistence and are small.

Original languageEnglish
Pages (from-to)1553-1595
Number of pages43
JournalReview of Financial Studies
Issue number3
StatePublished - 1 Mar 2022

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© 2021 The Author(s). Published by Oxford University Press.


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