The 1920s — when several of the victorious Allies emerged from World War I with large debts in their own currencies — offer in some ways the nearest parallel to the debt concerns dominating recent debate. And it occurred to me that it would be useful to have a side-by-side of Britain and France.
The two countries dealt with their debts very differently. Britain was a model of orthodoxy, returning to the gold standard and running huge primary surpluses to pay its debts; France, with a weaker political system, ended up inflating away much of its debt and accepting a big devaluation of the franc.
So how did the two economies fare? You don’t want to start the clock in 1918, because France was in part a battlefield, and could be expected to have some bounce as the war damage was fixed. So here’s real GDP from 1913 on, from the Maddison database:
And here’s debt, from the IMF debt database:
So virtue was not rewarded, and French political weakness actually led to a better economic performance.