Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
Why Central Banks Care About the Output Gap
Episode 151 of Monetary Policy Explained with Fexingo: Lucas and Luna dig into the output gap — the difference between what an economy can produce and what it actually produces. They explain how central banks estimate it, why it matters for interest rate decisions, and why it's so hard to measure in real time. Using the post-pandemic recovery as a case study, they show how misreading the output gap led to policy mistakes. They also touch on the role of potential GDP, the Phillips curve, and how the output gap guides forward guidance. A clear, practical look at one of the most important —…
The skinny
The skinny isn't ready yet — notes appear once the transcript is processed.