This is not an academic question: we in the euro area should be aiming to raise potential output above its current level of around 2¼ per cent; this is required if we are to reduce the euro area rate of unemployment significantly below its present unacceptably high level and to help prepare for the forthcoming ageing of European populations.
These include, in particular, the change in the relationship between the spare capacity of the economy and inflation, as well as the long-term decline in the natural interest rate and the sluggish productivity growth. The lower natural interest rate has reduced the room for interest rate cuts, as the effective lower bound lays the floor for them.