Data and Code for: "Did the U.S. Really Grow Out of its World War II Debt?" by Julien Acalin and Laurence Ball

This paper examines the effects of primary budget surpluses, surprise inflation, and pegged interest rates before the Fed-Treasury Accord of 1951 on the U.S. public debt/GDP ratio. We find that with primary budget balance and without the distortions in real interest rates caused by surprise inflation and the pre-Accord peg, debt/GDP would have declined only from 106% in 1946 to 74% in 1974, not to 23% as in actual history. Our findings imply that, over the last 76 years, only a small amount of debt reduction has been achieved through growth rates that exceed undistorted interest rates.