5.1 Macroeconometric Modelling
Inspired by the pioneering work of Tinbergen, Klein (1947, 1950) was the first to construct
a macroeconometric model in the tradition of the Cowles Commission. Soon others
followed Klein’s lead. Over a short space of time macroeconometric models were built for
almost every industrialized country, and even for some developing and centrally planned
economies. Macroeconometric models became an important tool of ex ante forecasting
and economic policy analysis, and started to grow both in size and sophistication. The
relatively stable economic environment of the 1950s and 1960s was an important factor
in the initial success enjoyed by macroeconometric models. The construction and use of
large-scale models presented a number of important computational problems, the solution
of which was of fundamental significance not only for the development of macroeconometric
modelling, but also for econometric practice in general. In this respect advances
in computer technology were clearly instrumental, and without them it is difficult to
imagine how the complicated computational problems involved in the estimation and
simulation of large-scale models could have been solved.The increasing availability of
better and faster computers was also instrumental as far as the types of problems studied
and the types of solutions offered in the literature were concerned. For example, recent
developments in the area of microeconometrics (see section 6.3 below) could hardly have
been possible if it were not for the very important recent advances in computing facilities