Definition of output gap in English:

output gap

noun

Economics
  • The amount by which the actual output of an economy falls short of its potential output.

    • ‘By 1997, with the U.S. economy nearing full capacity and Canada still experiencing a significant output gap, monetary policy in Canada became far looser than in the United States.’
    • ‘Under the proposed fiscal policy rule, tax rates or rebates would adjust automatically according to the output gap and the inflation gap.’
    • ‘Because of excess capacity and elevated unemployment - what economists call the output gap - plenty of slack still remains in the economy.’
    • ‘Moreover, we don't know what the output gap is because there is strong belief that potential growth may be in transition, based on improving productivity trends.’
    • ‘The liquidity trap is defined as the combination of a large output gap calling for monetary stimulus, with zero interest rate blocking monetary stimulus.’