An economy that is solely based on Bitcoins would most likely be more erratic initially due to the fact that they are a finite product and cannot shift in extreme manners in reaction to usable demand. With fiat, the central banks can intervene during a crisis to help stabilize things but with Bitcoin there is no such financial emergency cushion. This implies that economic shocks might be more severe and prices and wages would be left to do all the adjustments. With time, when Bitcoin was extensively used and accepted as a means of carrying out daily routines and when it was backed with proper financial infrastructure, volatility may decline. But it's gonna probably be not so stabile until then then, like the current fiat system is the stable fiat system.