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

This paper investigates the disinflation experiences of three countries, Australia, Canada and New Zealand. Unlike previous approaches which have sought to use institutional data to pre-determine the causes, speed and duration of the transitions to low inflation regimes this paper allows price data itself to determine the speed and timing of the reforms using smooth transition analysis. The results show that the process of transition is related to two factors: central bank independence and the general slowdown in economic activity which occurred during the early 1990s in all OECD countries. Other reforms to the labor market and fiscal policy were less influential.  1999 Elsevier Science Ltd. All rights reserved. JEL classification: E52; E58; C22