Miles begins by discussing the wide gap between the current level of GDP (at 4% lower than in 2008), and where it might have been in the absence of the crisis (about 10% higher than in 2008). He questions how much of that gap reflects a fall in the amount the UK could produce rather than the current output gap (the between actual production and the economy’s potential output). He argues that this is a central question for monetary policy, and inflation. Miles highlights the importance and difficulty of estimating potential output, noting that different measures are now giving very different signals.
Published on
24 May 2012
Press release