This is not a new finding, but it tends often to be forgotten. Looking at the period before the crisis, what looked like as a large output gap in 2003 turned out to be a very small one a few years later. Therefore, it is very dangerous to calibrate monetary policy mainly on the basis of this variable (see Charts 6 and 7).
(1.88 percent), Greece’s has risen above 5,000 b.p. (50 percent), and Spain’s is about 400 b.p. The slowdown in Europe so far has been relatively moderate, but the problems are expected to affect growth mainly in 2012, when growth in the eurozone is expected to be only 1 percent.