The more likely lesson that one might draw from this shared international experience is that the effect of output gaps on inflation is subject to a much longer lag than previously thought and that, to have an effect, the gaps must be not just large, but persistent. Indeed, the sensitivity of prices to excess supply might increase through time.
This is a first step in the right direction. For over a decade the entry wages of young people in the labour market have been stuck below the levels of the 1980s in real terms. The recession has made the situation more difficult. The youth unemployment rate verges on 30 per cent.