The National Institute of Economic and Social Research, the UK's oldest independent economic research institute, was founded exactly eighty years ago. The Institute's original mission was “to carry out research into the economic and social forces that affect people's lives and to improve the understanding of those forces and the ways in which policy can bring about change”. In the years since its foundation, the Institute's researchers have made many significant contributions in pursuit of that objective. To celebrate the milestone, this edition of the Review brings together five papers by current and former staff members reviewing aspects of the Institute's work.^{Footnote 1}

Right from the Institute's early days, macroeconomic modelling, forecasting and policy analysis has played a central role. The Institute published its first quarterly macroeconomic forecast of the UK economy in 1959 and the quarterly economic forecast has remained a central output to this day. But the models used to generate those forecasts have advanced greatly in the intervening period, reflecting developments in economic theory, econometric techniques and computer technology. The first two papers cover particular aspects of this effort.

Ray Barrell, Andy Blake and Garry Young^{Footnote 2} focus on four strands. First, the increasing focus of the theoretical underpinnings of the relationships in the Institute's models. Second, the development of a global econometric model (NiGEM), which is now a core forecasting tool for many other institutions here and abroad, including, for example, the Bank of England and the OECD. Third, the increased sophistication of policy analysis with economic models, focussing on policy frameworks rather than individual policy actions. And fourth, the development of techniques to better capture the inevitable uncertainty that surrounds a central economic forecast.

In their accompanying contribution, Stephen Hall and Brian Henry^{Footnote 3} discuss the empirical research of the 1970s and 1980s, including the increased attention to the modelling of supply and the integration of expectations. This was a period where the assumption of rational expectations played an increasingly prominent role in the external discussion of economic modelling and policy. Here the Institute followed a pragmatic approach, pioneering methods for the estimation of models with rational expectations but also showing an appropriate degree of scepticism and flexibility when it came to their application in the Institute's forecasting and policy analysis.^{Footnote 4}

As well as macroeconomic modelling and forecasting, the Institute has a strong track record in the analysis of productivity, and in particular why the UK's productivity performance has been so poor relative to that of many other advanced economies. This matters hugely because productivity is the fundamental determinant of a nation's living standards. Moreover, productivity growth has been especially weak in the decade since the financial crisis and the consequent stagnation of real incomes for the bulk of the population has played its part in the rising discontent with the liberal economic order. Geoff Mason, Mary O'Mahony and Rebecca Riley^{Footnote 5} review the Institute's work on this topic, much of which has focussed on the role played by comparatively low skill levels. This research encompasses the use of both international comparisons with aggregate data and exploitation of microeconomic business data sets. In addition, the Institute was a pioneer in the use of ‘matched plant’ studies, by Sig Prais, that looked closely inside the operations of specific types of work places in different countries.

The labour market has been a particular focus of much of the Institute's work, in part reflecting the many associated policy challenges. Peter Dolton^{Footnote 6} reviews the Institute's analysis of topics such as: persistently high unemployment in the 1980s; the behaviour of wages; poverty and inequality; the returns to education and training; the role of unions and industrial relations; immigration and Brexit; the impact of minimum wages and the future of work. He also highlights the increased sophistication of the methods used to analyse these issues, reflecting both better availability of microeconomic data sets, greater sophistication in econometric methods, and the increased use of actual and synthetic controlled experiments. Much of this work has moved the study of labour markets away from macroeconomic aggregates to the household as the unit of account and has acted to motivate much of the Institute's qualitative and quantitative work on social policy.

Finally, returning to macroeconomics, Jagjit Chadha,^{Footnote 7} the current Director of the Institute, discusses the increasing sophistication of the Institute's analysis of the impact of the rest of the world on the UK economy. In the Institute's early days, the focus of policymakers was very much on the trade balance and whether the exchange rate was at a level consistent with both internal and external balance. As time has progressed, the international mobility of both capital and labour has increased and financial markets have become more integrated. That has generated a new set of empirical puzzles – such as the tendency for capital to flow ‘uphill’ – and policy challenges – such as how conflicting national external policy objectives can be reconciled.

The Institute's role as a bridge between frontier economic and social research and policy-making at a time of great change is as critical now as it was in 1938. And so there is much to keep future generations of researchers inside and outside the Institute busy!