# How to interpret the difference between natural level and steady state in Macroeconomic theory

I am reading Monetary policy, inflation, and the business cycle: an introduction to the new Keynesian framework and its applications by Gali.

In this question I am going to use the output $$Y_t$$ as an example. I am going to use the notation from Gali.

• $$y$$ is notation for the steady state.
• $$y_t^n$$ is notation for the the natural level of output.
• $$\tilde{y}_t = y_t-y_t^n$$ is the output gap: deviation from the natural level.
• $$\hat{y}_t = y_t-y$$ is the deviation from steady state.

My question is: Intuitively speaking, what is the difference between steady state level and natural level?

Note: $$y_t = \log Y_t$$