Abstract: We argue that measurement error in historical price data has led researchers to erroneously believe that there was little persistence of inflation during the 19th century. Using a statistical technique that accounts for these errors, we estimate the persistence of (a) US inflation and (b) inflation in 14 other economies over the period 1842-1913. Our results indicate that persistence approximately doubles when we use this technique.
Keywords: Inflation persistence, gold standard, measurement errors, instrumental variables
JEL Classification: E31, F40, N10
Cite this paper: Stefan Gerlach, Rebecca Stuart, ‘Have We Under-Estimated Inflation Persistence Before WW1? US and International Evidence’, QUCEH Working Paper Series, Paper No. 25-05 (April 2025)
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