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Three world wars: Fiscal–monetary consequences

Author

Listed:
  • George J. Hall

    (a Department of Economics, Brandeis University, Waltham, MA 02453;)

  • Thomas J. Sargent

    (b Department of Economics, New York University, New York, NY 10003)

Abstract

We detect common forces that impinged on US monetary and fiscal policies during two 20th century world wars and now during the War on COVID-19 and then compare government and market responses to these forces. The US government had to finance large wartime surges in its expenditures by taxing, borrowing, or printing money. We document and interpret consequences of the choices that the government made in these three world wars.

Suggested Citation

  • George J. Hall & Thomas J. Sargent, 2022. "Three world wars: Fiscal–monetary consequences," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 119(18), pages 2200349119-, May.
    • Handle: RePEc:nas:journl:v:119:y:2022:p:e2200349119
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    Cited by:

    1. Dimakopoulou, Vasiliki & Economides, George & Philippopoulos, Apostolis & Vassilatos, Vanghelis, 2024. "Can central banks do the unpleasant job that governments should do?," European Economic Review, Elsevier, vol. 165(C).
    2. Caldara, Dario & Conlisk, Sarah & Iacoviello, Matteo & Penn, Maddie, 2026. "Do geopolitical risks raise or lower inflation?," Journal of International Economics, Elsevier, vol. 159(C).
    3. Ai, Jun & He, Tao & Su, Zhan, 2023. "Identifying influential nodes in complex networks based on resource allocation similarity," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 627(C).
    4. Masciandaro, Donato & Romelli, Davide & Ugolini, Stefano, 2025. "Credibility is not enough: Fiscal monetization and currency depreciation in early-modern Venice," Explorations in Economic History, Elsevier, vol. 98(C).
    5. Teles, Pedro & Tristani, Oreste, 2024. "The monetary financing of a large fiscal shock," Journal of Monetary Economics, Elsevier, vol. 147(S).
    6. Zhang, Yunhan & Liu, Zhixin & Jin, Hao, 2026. "Monetary-fiscal policy interactions in public debt consolidation: the role of fiscal rules and inflation targeting," Journal of International Money and Finance, Elsevier, vol. 161(C).
    7. Linlin Niu & Haoran Bai & Zhiwu Hong, 2026. "Geopolitical Risks, Inflation Pressure, and the U.S. Treasury Yield Curve," Working Papers 2025-09-25, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    8. David Andolfatto & Fernando M. Martin, 2025. "Monetary Policy and the COVID-19 Inflation Shock," Working Papers 2025-004, Federal Reserve Bank of St. Louis, revised 23 May 2026.
    9. Julien Acalin & Laurence Ball, 2026. "Did the United States Really Grow Out of Its World War II Debt?," American Economic Journal: Macroeconomics, American Economic Association, vol. 18(3), pages 112-135, July.

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