Output gap in euro area is much larger than official estimates – paper
Official estimates predict output gap 3–4% less negative than ECB author’s results
After the 2011 sovereign debt crisis the output gap in the euro area has been much larger than official estimates, a working paper published by the European Central Bank has said.
In An inflation-predicting measure of the output gap in the euro area, Marek Jarocinski and Michele Lenza estimate the deviations of output from its trend that are consistent with the behaviour of inflation.
"Versions featuring a secular-stagnation-like slowdown in trend growth, and hence a small output gap after 2011
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