Alertness and active communication No central bank represented in this room, or elsewhere, can reasonably spell out in advance its reaction to every conceivable contingency. This means that surprises in our behaviour can never be  12  Counterfactual simulations based on a large-scale estimated dynamic general equilibrium model of the euro area have quantified the implications of alternative policy scenarios.
This analysis reaches two conclusions. First, the loss in GDP that would have been associated with a situation in which the ECB did not deviate from the estimated reaction rule embedded in the model – and thus monetary policy in the euro area followed a tighter course – would have come close to 1% per annum on average since 2001.