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.

Industrial policy as a whole would be a very wide subject, which could only be covered superficially; it makes sense therefore to discuss a fairly small part of it. For present purposes industrial support policies are defined as policies which offer financial incentives in order to encourage private sector businesses to achieve objectives which are judged to be in the general interest as well as—very often—in their own interest. There is, of course, room for argument about precisely what should be included. Both the purposes and the operational practice of such policies have changed rapidly over recent years and I am concerned with their development in the Department of Trade and industry (DTI) during the period of Conservative government since 1979. While this article pas prepared for a conference on manufacturing industry, there is no presumption that the policies are particularly relevant to manufacturing rather than to many other sectors of the economy.

The United Kingdom's share of world exports of manufactures to other countries fell by over a third between 1954 and 1966—from 20.9 per cent to 13.1 per cent. This loss of share represents a loss of exports of some £2,450 million in 1966. Moreover United Kingdom exports rose rather more slowly in the second half of the period than in the first, while in world exports there was a slight acceleration.

This note is a sequel to an earlier article by W. A. B. Hopkin and W. A. H. Godley which set out a method of estimating how the main aggregates in the national accounts will be affected over a period of 18 months or two years by changes in taxation. More recent experience and additional research into methods of short-term economic forecasting have led to further developments in the same field.

Recent economic data indicate that the momentum of the present cyclical expansion in the United States continues to be stronger than widely expected at the beginning of last year. GDP is provisionally estimated to have risen by around 3¾ per cent in 1998, with domestic demand rising by 5 per cent. The last three years have all now seen output growth of 3½-4 per cent with high resource utilisation but low, and declining, price inflation.

In recent years Spain has experienced rapid economic development during a period of increasing European integration. Spanish policymakers have enhanced their credibility by becoming a member of both the EC and the ERM. A strong commitment to Spanish participation in a future European Economic and Monetary Union confirms Spain's determination to ‘catch-up’ and converge towards the model of the more advanced economies of Europe. The National Institute's Global Econometric Model (NIGEM) now contains a detailed econometric model of Spain. This note begins with an overview of economic events and policy in Spain over the last twenty years. This is followed by sections which describe in more detail the reforms and economic outcomes regarding the labour market, price and wage determination, the balance of payments and the finances of the public sector. The econometric model is then described and the effects of the structural reforms upon the individual equations evaluated. The penultimate section uses the model to simulate the effects of macroeconomic policies which the Spanish authorities have either implemented or may be considering. This is followed by a conclusion.

This paper looks at some of the key fiscal questions related to Scottish independence, drawing on detailed analysis of household survey data, official data on public spending and revenues, and using a model of the UK and Scotland's public finances over the next half a century. We examine how and why public spending on, and revenues raised from, Scotland differ from the average across the UK, and how Scotland's fiscal position might be expected to evolve over the next 50 years under current policies.

This article discusses the experience to date with monetary targets. The first section briefly surveys the historical background to the adoption of monetary targets and gives a résumé of monetary policy during the last three years. Without delving deeply into the subtleties of the complicated art of central banking, the next section gives an inter pretation of what the Bank of England actually does when it attempts to control the money supply, which does not correspond at all closely to the simple representation of the techniques of money supply control contained in some of the standard economics textbooks. Attention is also drawn to the problems of the present approach to monetary policy making. Finally an assessment of the performance of recent policy is offered.

In any projection of the working population in Britain, it is the number of married women at work which is the main uncertainty. For men and (to a lesser extent) for single women, the numbers likely to be working can be foreseen fairly accurately. Reasonable estimates can be made of the total numbers in each age group, and in all the sizeable age-groups over 95 per cent have a job. These participation rates—that is, the proportion in each age group which is at work—have not changed much in the past, and there is not much scope for them to rise in the future.

Estimation and simulation of sustainable real exchange rates in a sample of EU member countries find vulnerabilities connected to the adoption of the euro if the rate vis-à-vis the euro were to be fixed with weak fundamentals and inappropriate policies. Sample countries have benefited from dramatic improvements in their external positions, in part driven by inflows of foreign direct investment. As a result, exchange rate misalignments have narrowed in most countries and, looking ahead, are expected to narrow further. These results are conditional, however, on optimistic projections with respect to world import demand and foreign direct investment inflows.

The purpose of the Enquiry, whose results are reported in this article, was to assess the competitiveness of British exports in five Eastern European countries—Hungary, Poland, Czechoslovakia, Yugoslavia and Bulgaria. The Enquiry also investigated, more generally, the possibilities of promoting trade with these five countries. They were chosen because their trade with other countries is almost entirely the monopoly of specialised foreign trade corporations;(1) hence for each category of products there is only one buyer in each country. It is therefore possible to make some assessment of the competitiveness of British exports from the consumer end without an impossibly large number of interviews. These foreign trade corporations keep in touch with all the main suppliers both inside and outside the Comecon area, and are therefore in a good position to answer questions about the competitiveness of various Western countries' exports—questions concerning not only statistically quantifiable aspects (such as price) but also such matters as packaging and public relations.

In recent years, international product markets have become more open as a consequence of a reduction in local trade barriers such as the completion of the single market in Europe and the North American Free Trade Agreement and through a reduction in worldwide trade barriers through GATT. The resulting increase in the competitiveness of global product markets has been intensified by the emergence of competition from the former Communist countries in Europe and rapidly developing countries from South East Asia.

The ‘productivity puzzle’ – the substantial drop in productivity in the UK since the onset of the financial crisis in 2008 – has exercised economists and policymakers alike. The loss in productivity levels, mainly output per hour, should have been restored by now and the trend growth should have been recovered, or even exceeded. Instead after a very sharp fall, much faster than many of our competitors, it has only recently started to rise again, but at a stubbornly slow rate and at the time of writing stood some 2 per cent below its pre-recession levels. So although we are likely to get back to where we were pretty soon, it is possible that the gap, with where we should have been on pre-recession trends, continues. The Bank of England calculates this gap could stay as high as 16 per cent or even widen if the rate of productivity increase does not return to normal. This is bad for the economy and especially bad for innovation, investment, growth and competitiveness. This paper examines possible explanations and offers some possible answers. It sides, in the end, more with those that argue that demand deficiency looks like being at least a part of the explanation, but acknowledges that changes in the structure and destination of employment, since the recession started, have also played a role.

The Review is pleased to give hospitality to CLARE Group articles, but is not necessarily in agreement with the views expressed; responsibility for these rests with the author. Members of the CLARE Group are M.J. Artis, A.J.C. Britton, W.A. Brown, W.J. Carlin, J.S. Flemming, C.A.E. Goodhart, J.A. Kay, R.C.O. Matthews, D. Miles, M.H. Miller, P.M. Oppenheimer, M.V. Posner, W.B. Reddaway, J.R. Sargent, M.FG. Scott, Z.A. Silberston, J.H.B. Tew, S. Wadhwani and M. Weale.

Between 1950 and the oil price increase of 1973, British Coal lost most of its markets for direct sales to industry and households. Its hold over electricity generation actually strengthened in the 1960s and 1970s, as competition from petroleum faded and the contribution from nuclear energy was delayed and limited by technical and financial problems. But competition from coal imports has increased; and a radically new technology for using natural gas to generate electricity has developed.

This new technology arrived simultaneously with the privatisation of electricity supply. The new structure of ownership has not changed the fundamental nature of the choices open to generators or big customers, but has liberated decision making from some key constraints, and removed some powers from Ministers. Coal imports and gas usage are rapidly eroding British Coal's market, towards a level one tenth of 1960's sales. By the time the public noted the speed of the final contraction of coal, in the autumn of 1992, it was already too late even for a modest application of the brakes. The author argues that this is to be regretted.

For the future, the nuclear question remains open, but is perhaps a dubious bet for the UK after all the effort and errors of the past.