The behavior of prices under changing monetary regimes: The United States and Great Britain.

Abstract

This paper is an empirical investigation of the behaviour of prices in the United States (U.S.) and Great Britain (U.K.) over the last two and a half centuries. The objective is to determine if price stability was attained during the classical gold standard regime, Bretton Woods system and a flexible exchange rate regime using unit root testing procedures. This paper explores some of the theory and techniques involved in unit root testing. These tests are then utilized to determine if the price level was stationary during and after the gold standard period.