Not surprisingly, this exercise reveals that in non-stressed economies the credit gap is either insignificant or making a very small contribution to economic slack. In stressed economies, the same measure contributes to up to a third of economic slack. This analysis suggests that credit constraints are putting a brake on the recovery in stressed countries, which adds to disinflationary pressures.
You can also see why the heterogeneity becomes a factor in assessing low inflation in the euro area. Calibrating the policy response What is the right policy response to these developments? Essentially, we are confronting three issues that might warrant a response. First, the common effect of exogenous factors, including the exchange rate, on euro area inflation.