Unemployment gap key in estimating output gap, trend growth declining.
Different ways of measuring the output gap can lead to very different results. To deal with this uncertainty, the researchers looked at various popular methods and averaged the estimates. They found that the unemployment gap is helpful in estimating the output gap, but once you know the unemployment gap, the inflation gap doesn't depend on the output gap. Over time, trend output growth has been decreasing, with the estimate at the end of the study being only about 1%. The data also suggest that extreme events happen more often than expected.