The difference, usually expressed as a percentage, between the gross domestic product on the one hand and the available production potential of an economy on the other (the amount by which a country’s output, or gross national product, falls short of what it could be given its available resources). A positive output gap can indicate a possible overheating of the economy and thus an imminent rise in inflation, while a negative output gap points to spare capacity and possible disinflation. Therefore, the ECB pays close attention to this variable. – See pressure, disinflationary, output gap, two-pillar principle.
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