Introduction

Applied econometrics, in particular econometric modeling, has evolved and matured significantly since its early days in the late 1940s. Along the way, the field has been met with its share of challenges that have proved to be catalytic for important subsequent improvements. More than 40 years ago, the first global oil shock and the following recession exposed significant design flaws in early econometric models and spawned a reorientation of applied econometrics. Similarly, in this century, almost a decade after the global financial crisis economists and politicians are still struggling to agree on the lessons from the experience. Whatever advances in economic theory will ultimately emerge, they are likely to be accompanied by supporting empirical research. It seems obvious to many observers that in support of a better understanding of the global economy, the present time should be a time of resurgence for national and international applied econometrics. And nobody embodied that tradition of careful, yet ambitious research more than Lawrence R. Klein, whose pioneering work laid the foundation for the field. He has been a life-long contributor to, observer of, and commentator on the continuous development and improvement of applied econometrics. Throughout all the challenges he witnessed, he never wavered in his conviction that model-based economic research would be essential for evidence-based public policy and would ultimately provide the pathway to an improved economic well-being of society. It is this maxim that has been the foundation of Klein’s scholarly commitment, and the contributions in this volume seek to offer new insights in that tradition…