Rising government debt levels around the world are raising the specter that authorities might seek to inflate away the debt. In theoretical settings where fiscal policy “dominates” monetary policy, higher debt without offsetting changes in primary surpluses should lead households to anticipate this higher inflation. Are household inflation expectations sensitive to fiscal considerations in practice? We field a large randomized control trial on U.S. households to address this question by providing randomly chosen subsets of households with information treatments about the fiscal outlook and then observing how they revise their expectations about future inflation as well as taxes and government spending. We find that information about the current debt or deficit levels has little impact on inflation expectations but that news about future debt leads them to anticipate higher inflation, both in the short run and long run. News about rising debt also induces households to anticipate rising spending and a higher rate of interest for government debt.

More on this topic

BFI Working Paper·Jun 30, 2025

Borrowing Constraints, Markups, and Misallocation

Huiyu Li, Chen Lian, Yueran Ma, and Emily Martell
Topics: Fiscal Studies
BFI Working Paper·Jun 18, 2025

Maturity Risks and Bank Runs

Jihene Arfaoui and Harald Uhlig
Topics: Fiscal Studies
BFI Working Paper·Jun 5, 2025

Stablecoin Runs and the Centralization of Arbitrage

Yiming Ma, Yao Zeng, and Anthony Lee Zhang
Topics: Fiscal Studies, Technology & Innovation