Money, debt and prices in the United Kingdom, 1705-1996

This paper constructs a consistent series for the market value of UK government debt over almost 300 years, analysing how monetary and fiscal policy affect the path of the UK price level. Specifically, it examines the interactions between debts, deficits, the monetary base and the price level. Overall, the price level has been closely related to the evolution of the base money supply. Across different sample periods, there is little econometric evidence that fiscal policy has affected the course of the price level (or of the exchange rate under the Gold Standard). Government debt has not significantly affected the base money stock, either.