Further investigation of the uncertain trend in US GDP

The presence of deterministic or stochastic trend in US GDP has been a continuing debate in the literature of macroeconomics. Ben-David and Papell (1995 Ben-David, D and Papell, DH. 1995. The great wars, the great crash, and steady growth: some new evidence about an old stylized. Journal of Monetary Economics, 36: 453–75. Crossref], Web of Science ®] , Google Scholar]) found evidence in favour of trend stationarity using the secular sample of Maddison (1991 Maddison, A. 1991. Dynamics Forces in Capitalist Development: A Long-Run Comparative View, Oxford: Oxford University Press.  Google Scholar]). More recently, Murray and Nelson (2000 Murray, CJ and Nelson, CR. 2000. The uncertain trend in U.S. GDP. Journal of Monetary Economics, 46: 79–95. Crossref], Web of Science ®] , Google Scholar]) correctly criticized this finding arguing that the Maddision data are plagued with additive outliers (AO), which bias inference towards stationarity. Hence, they propose to set the secular sample aside and conduct inference using a more homogeneous but shorter time-span post-WWII sample. In this article we re-visit the Maddison data by employing a test that is robust against AO's. Our results suggest the US GDP can be modelled as trend stationary process