Understanding the disinflations in Australia, Canada and New Zealand usingevidence from smooth transition analysis

This paper investigates the disinflation experiences of three countries, Au stralia, Canada and New Zealand. Unlike previous approaches which have soug ht to use institutional data to pre-determine the causes, speed and duratio n of the transitions to low inflation regimes this paper allows price data itself to determine the speed and timing of the reforms using smooth transi tion analysis. The results show that the process of transition is related t o two factors: central bank independence and the general slowdown in econom ic activity which occurred during the early 1990s in all OECD countries. Ot her reforms to the labor market and fiscal policy were less influential. (C ) 1999 Elsevier Science Ltd. All rights reserved.