The fact that inflation did not react much to changing unemployment also led some to reassess other structural features such as the slope of the Phillips curve. 12 As discussed in Rachel and Summers (2019), many factors combine to determine the normal growth rate of the economy and r*.
Persistent movements in longer-term interest rates in a stable inflation environment are one indicator of r* movements. 11  -7 does not require a significant change in our approach. The significant fall in r*, however, may demand more fundamental change. A lower r* combined with low inflation means that interest rates will run, on average, significantly closer to their effective lower bound.