Mura - Input-Output

Input-Output Model
URP 6200
Joseph Zamora
Input-Output Analysis
Wassily Leontief b. 1906 Nobel Prize, 1973
for the development of the input output method and for its application to important economic problems.
x = (I-A)-1 y
Input-Output Basically Described:

Large tables of data that describe the interconnectedness of the industries, households, and government entities in an area the output of an industry will appear as the input of other industries. This helps us to track the flow of money from one entity to the next
Economic Modeling Specialists, Inc. (2008) Practical Input-Output Modeling for Regional Development. www.economicmodeling.com/resources/wpcontent/uploads/2007/09/ pwp_practical_inputoutput_modeling.pdf
Input-Output Precisely Defined:

IO models describe both the transactions between the region and the rest of the world among activities within the region. These models produce a multiplier index that measures the total effect or impact of an increase in demand on employment or income. They can be used for predicting and forecasting the impacts of potential future performance of a regional economy & changes in inter-industry transactions.
Stimson, R.J., Stough, R.R., Roberts, B.H. (2002) Regional Economic Development: Analysis and Planning Strategy. Springer-Verlag Berlin Heidelberg
Practical Uses:
Descriptive can reveal knowledge about an areas
economy that would be impossible to get otherwise.
Forecasting estimate total impact of certain

events or policy changes
Assessment evaluate and assess specific goals,

scenarios, etc
IO is used to identify the best approach !!
Simplified Circular Flow View of The Economy

$$ Consumption Spending (Yi)
Goods & Services

Households Labor $$ Wages & Salaries Businesses Businesses
Households buy the output of business: final demand or Yi
Households sell labor & other inputs to business as inputs to production
Businesses purchase from other businesses to produce their own goods / services. This is intermediate demand or xij (output of industry i sold to industry j)
Perlich , P. (2008) University of Utah: PowerPoint presentation http://www.business.utah.edu/~bebrpsp/IO/IO.ppt
What about Equilibrium?

Consumer sector regarded as production sector
(inputs consumption & outputs - labor)
In this closed system, final demand, employment and wage rate are treated as unknowns Their equilibrium values are solved simultaneously with the rest of the variables This is a model that simultaneously solves a system of equations involving all prices and all quantities in an economy Includes impact of demand on supply and vice versa
Yan, C.S. (1969) Introduction to Input-Output Economics. Holt, Rinehart and Winston
Foundation: a set of accounts

Intermediate private business activities within the region Households individuals/families residing in area
(Buyers of consumer goods & sellers of labor)
Government state, local & national public authorities Outside world activities and individuals outside the region Capital the stock of private capital
Hoover, E.M. (1971) An Introduction to Regional Economics. New York: Alfred A Knopf
3 Basic Components of Input-Output Models

Transactions Table - shows the monetary flows of
goods and services in a local economy
Direct Requirements Table - the purchases of

resources (inputs) by a sector from all sectors to produce one dollar of output
Total Requirements Table the multipliers are drawn

from this table
Transactions Table Flows

Total outlays = Total output Intermediate purchases - goods and services purchased and used in the local production process Final demands - purchases for final consumption Final payments - payments for inputs outside intermediate production process
Predictive Use of Input-Output Analysis

The economy and certain impacts are tracked The multipliers are derived only from local transactions Multiplier tells us how much of an increase in total regional income (or sales, jobs) to expect as a result of each additional dollar of export sales or income etc
Three Types of Multipliers
1. Output
2. Employment 3. Income
How to Use IO
Step 1 - Use IO to start discussion
Whats the regions economic base? What industries are the regions top performers?
Step 2 Translate policy issues

into direct effects How many jobs are being gained/lost?
Step 3 Enter direct effects into IO

Model What are the ripple effects across the economy?
Step 4 - Interpret Total effects

What should be done?
Chain of Effects
Multipliers describe chain of effects This will continue until there are demand leakages $ leaves the region The total effect will be no more than 2 or 3 times the size of the initial demand increase
Direct directly affected by business activity/development Indirect impacts caused by inter-industry exchanges Induced impacts created by household spending of those directly and indirectly employed by the industry/development
Measuring the Impact of Newport News Shipbuilding to the Virginia Economy

Newport News Shipbuilding (NNS) is VAs largest manufacturing employer NNS performs design, construction, overhaul and refueling of nuclear powered aircraft carriers and submarines for US Navy

We use input-output analysis to measure economic impacts in terms of employment, personal income, and state & local taxes This analysis is for 1996, with forecasts through 2020 assuming 1.5% growth in employment annually (1997-2000) Direct, Indirect & Induced effects are measured

45,516 Virginia jobs attributed to NNS in 1996 Individuals in these jobs earned over $1.5 Billion in wages, interest and dividends in 1996 Employers tied to NNS disbursed over $1.5 Billion in wages and benefits for these jobs NNS business activities resulted in $107 Million of Virginia business taxes In addition, Virginia also received $63 Million in state and local income tax in 1996

A Step Further In 1998 a new econometric input-output model was developed that could run in a windows environment New features made it possible to rapidly simulate the effects of alternative policies and/or investment strategies on the economy Econometrics - the application of statistical methods to the empirical estimation of economic relationships The end result a dynamic capacity for economic forecasting and impact analysis

Step 1 National factors provide regional demand increase Step 2 Changes in output take place
Reflects technical change dynamic, not static so overcomes major IO criticism
Step 3 Changes in output, change demand for labor

Employment & labor determine new levels of population
Step 4 Total personal income determined Completes 1st set of internal demands, originating externally
Step 5 New higher wages & salaries are spent, local business investment & govt spending
2nd round of internal demands

Steps 2-5 are repeated until new changes in economic activity have been exhausted
This completes the model sequence for 1 year

This same process is then used to forecast each year through 2014
Integrating Qualitative and Qualitative Analysis

Major challenge is how to incorporate political and other factors AHP Analytical Hierarchy Process popular tool for multi-objective planning (since 1970s)
Incorporates judgments and personal values in a logical way to rank alternatives
DSS is a (shift-share) input-output model that enables the choice of the best alternative, according to specific objectives Basically, you can maximize the utility of both economic and sociopolitical components
(We can use this to develop double & triple bottom-line projects!!)
Download these files (here)

Matrices & Input-Output Model Tutorial Practical Input-Output Modeling for Regional Development (www.economicmodeling.com) The Hawaii Inter-County Input-Output Report The Hawaii Inter-County Input-Output Condensed Final Spreadsheet The Bureau of Economic Analysis - Regional Multipliers from the Regional Input-Output Modeling System (RIMS II): A Brief Description (www.bea.gov) The Bureau of Economic Analysis - Regional Multipliers: A User Handbook for the Regional Input-Output Modeling System
Conclusion
IO helps to evaluate, predict & assess goals and policies in an inter-connected system of sectors / industries in an economy
When combined with qualitative frameworks, a dynamic, transparent and powerful tool is utilized to assist decisionmaking across multiple objectives
THANK YOU
References
Hoover, E.M. (1971) An Introduction to Regional Economics. New York: Alfred A Knopf Shaffer, R., Deller, S., Marcouiller, D. (2004) Community Economics: Linking Theory and Practice. Iowa: Blackwell Stimson, R.J., Stough, R.R., Roberts, B.H. (2002) Regional Economic Development: Analysis and Planning Strategy. Springer-Verlag Berlin Heidelberg Yan, C.S. (1969) Introduction to Input-Output Economics. Holt, Rinehart and Winston Economic Modeling Specialists, Inc. (2008) Practical Input-Output Modeling for RegionalDevelopment.www.economicmodeling.com/resources/wpcontent/u ploads/2007/09/b pwp_practical_inputoutput_modeling.pdf Bureau of Economic Analysis. (2008) Regional Multipliers: A User Handbook for the Regional Input-Output Modeling System (RIMS II) http://www.bea.gov/scb/pdf/regional/perinc/meth/rims2.pdf Liu, T.E. (2008) The Hawaii Inter-County Input-Output Report. Department of Business, Economic Development and Tourism STATE OF HAWAII. http://hawaii.gov/dbedt/info/economic/data_reports/2002_Intercounty_I-O Perlich , P. (2008) University of Utah: PowerPoint presentation http://www.business.utah.edu/~bebrpsp/IO/IO.ppt

Mura - Input-Output

Transféré par

Informations du document

Description originale:

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Mura - Input-Output

Transféré par

Droits d'auteur :

Formats disponibles

Input-Output Model

Input-Output Basically Described:

Input-Output Precisely Defined:

Forecasting estimate total impact of certain

Assessment evaluate and assess specific goals,

Simplified Circular Flow View of The Economy

Goods & Services

Households buy the output of business: final demand or Yi

Households sell labor & other inputs to business as inputs to production

Perlich , P. (2008) University of Utah: PowerPoint presentation http://www.business.utah.edu/~bebrpsp/IO/IO.ppt

What about Equilibrium?

Foundation: a set of accounts

3 Basic Components of Input-Output Models

Direct Requirements Table - the purchases of

Total Requirements Table the multipliers are drawn

Transactions Table Flows

Predictive Use of Input-Output Analysis

Three Types of Multipliers

Step 2 Translate policy issues

Step 3 Enter direct effects into IO

Step 4 - Interpret Total effects

Measuring the Impact of Newport News Shipbuilding to the Virginia Economy

Measuring the Impact of Newport News Shipbuilding to the Virginia Economy

Measuring the Impact of Newport News Shipbuilding to the Virginia Economy

Measuring the Impact of Newport News Shipbuilding to the Virginia Economy

Measuring the Impact of Newport News Shipbuilding to the Virginia Economy

Step 3 Changes in output, change demand for labor

Measuring the Impact of Newport News Shipbuilding to the Virginia Economy

This completes the model sequence for 1 year

Integrating Qualitative and Qualitative Analysis

Download these files (here)

Vous aimerez peut-être aussi