MEASURING PRICE-LEVEL UNCERTAINTY AND INSTABILITY IN THE UNITED STATES, 1850-2012

We measure price-level uncertainty and instability in the United States over the period 1850 to 2012. Major outbreaks of price-level uncertainty and instability occur both before and after World War II, alternating with three price-level moderations: one near the turn of the twentieth century, another under Bretton Woods, and a third in the 1990s. There is no evidence that the price level was systematically more stable or less uncertain before or after World War II. Moderations sometimes involved links to gold, but the experience of the 1990s proves that a well-managed fiat regime can achieve the same outcome.