With the significant changes taking place in the world economic environment in the 1970s,
arising largely from the breakdown of the Bretton Woods system and the quadrupling of
oil prices, econometrics entered a new phase of its development. Mainstream macroeconometric
models built during the 1950s and 1960s, in an era of relative economic stability
with stable energy prices and fixed exchange rates, were no longer capable of adequately
capturing the economic realities of the 1970s.