Macroeconometric Models: A Panoramic View of Their History
Multi-equation econometric models of national economies were an invention of the 1930s, and the first models of the British economy, among the earliest built anywhere, date from the last years of that decade. Although the building of econometric models in Britain did not recommence until the late 1950s, the ten or so years that followed, to 1968, represent a period in which British model-building was rich in innovation and diversity. Thereafter, however, one type of model -the income-expenditure model-dominated the scene until the end of the following decade. During this time, the income-expenditure model underwent an enormous amount of development, but it was not until the 1980s that it first faced a serious challenger. Even so, the modern mainstream macroeconometric models of the UK economy can trace their ancestry to the original income-expenditure models.