The Melbourne Institute was formed in 1962 under the leadership of Professor Ronald Henderson. It began publishing 'The Australian Economic Review' in 1968". It was initially known as the Institute of Applied Economic Research and later became the Institute of Applied Economic and Social Research. It has traditionally been referred to as the "Melbourne Institute". It was the first Economics research institute in an Australian university. Henderson built up an organisation with about 40 staff by the early 1970s. It engaged in a wide range of research areas including macroeconomic forecasting, financial economics and social economics, and is best remembered for its work on poverty and the development of the Henderson Poverty Line. After the Henderson era, Peter Dixon was appointed Director and after some restructuring, the new Melbourne Institute based its operation around Dixon's ORANI model of the Australian economy. In the early 1990s, Peter Dixon and a number of his senior colleagues left the institute to join Monash University. This necessitated a second period of adjustment and restructuring initiated by Professor Richard Blandy who was Director from 1992 to 1994. Professor Peter Dawkins, took up his position of Director in January 1996 until April 2005. In 1996, the Director and his senior management team, in association with the staff and the advisory board, developed a strategic plan with the unifying theme being the link between economic performance and social outcomes. The first version of this plan was for the period 1996-2000 and it is updated annually. From April 2005 until April 2007 the Director was Professor John Freebairn. From August 2007 until July 2009, the Director was Professor Stephen Sedgwick and from April 2010 Professor Deborah Cobb-Clark.

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