Abstract
Providing empirical evidence regarding the increased or decreased volatility of domestic real gross national product (GNP) measures following the change from a fixed to a flexible exchange rate regime has proved difficult. Comparing the volatility of GNP measures across the two regimes in conventional ways begs the question. The question is not whether the volatility of the measure has changed, but rather whether the volatility is different than it otherwise would have been. This paper introduces the cosine-squared cepstrum to provide evidence that U.S. real GNP has been less volatile since 1973 than it would have been had the fixed exchange rate regime continued.
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