By historical standards, the term premium appears to have come down significantly in recent years and to be quite low. A flat yield curve resulting from low term premiums should have quite different implications for future growth than would a flat yield curve resulting from tight monetary policy.
Indeed, an exogenous decline in term premiums would make financial conditions more accommodative and would, other things being equal, be followed by higher growth. To account for these developments, an estimate of the term premium can be added to a simple regression model of the relationship between real GDP growth and the slope of the yield curve.