Abstract
Trend GDP growth has assumed an importance in the public debate not least because the decomposition of GDP into trend and cyclical components lies at the heart of the 'Golden Rule'. This rule states that the Government should only borrow to invest over the economic cycle. Furthermore, over the medium term the public finances are projected using Treasury estimates of trend GDP growth. Trend growth estimates are therefore central to discussions about the sustainability of the public finances (see HM Treasury, 1999a).
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