Such structural rigidity may be sustained because of various regulations, a lack of adequate support in developing new industries, and slow corporate responses. In such a case, the negative output gap is likely to persist in existing industries, while newly emerging or potentially large markets do not promptly develop to stimulate new demand (and possibly, generate a positive output gap).
This may lead not only to a persistent negative output gap, but also to sluggish economic growth even after the output gap has been eliminated. Furthermore, the phenomenon of long-standing mild deflation could be associated with such structural issues.