The difference between the average dividend yield on equities and the average yield on long-dated government bonds. During periods of stable prices the yield on equities usually needs to be greater to compensate investors for their relative riskiness, so the yield gap is positive. During periods of high inflation the fact that equities are expected to provide capital gains to compensate for inflation, while bonds are not, can lead to a reverse yield gap, with returns on government bonds above those on equities. See also reverse yield gap.