A steady-state approach to trend/cycle decomposition

"In this paper, we present a new approach to trend/cycle decomposition. The trend of an integrated time series is defined as the steady-state level of the series, a definition that has exploitable forecasting implications useful for identifying the trend. We operationalize the steady-state approach for regime-switching processes and we use generated data from such processes to demonstrate the advantages of the steady-state approach over alternative approaches. We then apply the steady-state approach to estimate the trend and cycle of U.S. real GDP implied by a regime-switching forecasting model. Our findings portray a very different picture of the business cycle than implied by standard linear methods"--Federal Reserve Bank of St. Louis web site.