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Macroeconomic Modelling at the Institute: Hopes, Challenges and a Lasting Contribution

Published online by Cambridge University Press:  01 January 2020

Ray Barrell*
Affiliation:
Centre for Macroeconomics, LSE; Brunel University London
Andy Blake*
Affiliation:
Bank of England
Garry Young*
Affiliation:
NIESR

Abstract

The Institute is a world leader in macroeconomic modelling and forecasting. It has produced quarterly economic forecasts for around sixty years, supported by macroeconomic models. The aim of the original builders of macroeconomic models was to transform understanding of how economies worked and use that knowledge to improve economic policy. In the early years, when computers were rare, macroeconomic modelling was a new frontier and Institute economists were among the first to produce a working model of the UK economy. It is remarkable how quickly models were being used to produce forecasts, assess policy and influence the international macroeconomic research agenda. The models built at the Institute were mainstream in the sense that they followed the contents of standard macroeconomic textbooks, developed with the subject, and fitted the facts as they were known at the time. There were continual improvements in understanding as the subject developed in response to new ideas and developments in the global economy. This article celebrates the development of macroeconomic modelling at the Institute and the contribution it has made to public life.

Type
Research Articles
Copyright
Copyright © 2018 National Institute of Economic and Social Research

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Footnotes

We are grateful to Jagjit Chadha for comments on an earlier draft and to all current and former colleagues who have contributed to the development of macroeconomic modelling at the Institute. This paper reflects the views of the authors and should not be considered to represent those of the Bank of England or any of its policy committees.

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