Regional multipliers : a user handbook for the regional input-output modeling systems (RIMS II)

76 Pages·1997·4.1 MB·English

by  United States. Bureau of Economic Analysis

C R
59.8: 26/2/ 997
REGIONAL
MULTIPLIERS
A User Handbook for the Regional Input-Output Modeling System (RIMS II)* Third Edition
¥
U.S. DEPARTMENT OF COMMERCE / %
Economics and Statistics Administration
Bureau of Economic Analysis

Pennsylvania State University
Libraries
MAY 1 1997
Documents Collection
U.S. Depository Copy
REGIONAL
MULTIPLIERS
A User Handbook for the Regional Input-Output Modeling System (RIMS II)
Third Edition
March 1997
DEPARTMENT OF COMMERCE
U.S.
William M. Daley, Secretary
• • • •
X/lM ECONOM'CS AND STATISTICS ADMINISTRATION
ECONOMICS Everett M. Ehrlich, UnderSecretory forEconomic Affairs
ANDSTATISTICS
ADMINISTRATION
BUREAU OF ECONOMIC ANALYSIS
J. Steven Landefeld, Director
Betty L. Barker, Deputy Director
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402

Acknowledgments
The Regional Input-Output Modeling System at the Howard L. Friedenberg, Chief of the Special
Bureau ofEconomic Analysis is under the general guid- Studies Branch, assisted in preparing the text. Clifford
ance ofHugh W. Knox, Associate Director for Regional H. Woodruff, III designedand produced the tables.
Economics,andunderthedirectionofJohnR. Kort,Chief Ernestine T. Gladden of the Publication Services
oftheRegional EconomicAnalysis Division. Branch ofthe Current Business Analysis Division coor-
This handbook was prepared by G. Andrew Bernat, dinated the publication ofthis book and typeset the text
Jr., Chief of the Analysis Branch, and by regional and the text tables. Eric B. Manning assisted in type-
economists Zoe O. Ambargis, Eric S. Repice, and Philip setting the tables. M. Gretchen Gibson edited the text.
A. Szczesniak. Wm. RonnieFosterdesigned the cover.
111
Digitized by the Internet Archive
2013
in
http://archive.org/details/regionalmultipOOunit
Contents
—
Acknowledgments iii
Introduction 1
RIMS II Multipliers for Output, Earnings, and Employment 3
—
Final-Demand Multipliers for Output ................................. 3
Multipliersfor Earnings 3
Multipliersfor Employment 4
Choosing a Multiplier 4
Information Required From Users ofRIMS II 7
Affected Region ............ 7
Affected Industries 8
Project Phases 8
InitialChanges — 8
Change in final demand 9
Change in earnings and employment 9
Separating the Initial Changes 9
Four Case Studies Using RIMS II Multipliers ..... 11
Case Study 1: Constructing and Operating a Sports Facility 1
Sports facility construction 1
Using data on final-demand changes 1
Using data on initial changes in earnings and employment 1
Using data on changes in the bill-of-goods 1
Sports facility operation 12
Case Study 2: Closing and Converting a Military Base and Operating a Factory 14
Military base closing 14
Factory operation 15
Impacts ofthe conversion 16
Case Study 3: Departure ofan Industry from a Region 17
Case Study 4: Arrival ofan Industry in a Region 17
Appendix A: Data Sources and Methods 21
The Adjusted National Direct Requirements Table 21
The householdrow 21
The householdcolumn 22
The Regional Direct Requirements Table 22
The Regional Total Requirements Table and the Multipliers 23
Final-demand earnings and employmentmultipliers 23
Direct-effect earnings and employment multipliers 23
Output-driven multipliers 24
Suggested Reading 24
Appendix B: Detailed Industries for Which Multipliers Are Available 27
Appendix C: Industry Aggregations for Which Multipliers Are Available 35
.
Appendix D: Sample Tables From RIMS II 39
Appendix E: BEA Economic Areas 59
VI
.
Introduction
Effective planning forpublic- andprivate-sectorprojects adjust the national 1-0 table in order to reflect a region's
and programs at the State and local levels requires a sys- industrial structure and trading patterns.3
tematic analysis ofthe economic impacts ofthe projects Using RIMS II for impact analyses has several
and programs on affected regions. In turn, systematic advantages.4 RIMS II multipliers can be estimated for
analysis of economic impacts must account for the in- any region composed of one or more counties and for
terindustry relationships within regions because these any industry or group of industries in the national 1-0
relationships largely determine how regional economies table. The cost ofestimating regional multipliers is rel-
are likely to respond to project and program changes. atively low because ofthe accessibility ofthe main data
Thus, regional input-output (I-O) multipliers, which ac- sources for RIMS II. According to empirical tests, the
count for interindustry relationships within regions, are estimates based on RIMS II are similar in magnitude to
useful tools forregional economic impact analysis. the estimates based onrelatively expensive surveys.5
Inthe 1970's, theBureau ofEconomicAnalysis(BEA) To effectively use the multipliers for impact analy-
developed a method for estimating regional 1-0 multi- sis, users must provide geographically and industrially
pliers known as RIMS (Regional Industrial Multiplier detailedinformationontheinitialchangesinoutput,earn-
System), which was based on the work of Garnick and ings, or employmentthat are associated with the project
Drake.1 Inthe 1980's,BEAcompletedanenhancementof orprogramunderstudy. The multiplierscan thenbe used
RIMS, known as RIMS II (Regional Input-Output Mod- to estimate the total impact ofthe project orprogram on
eling System), and published a handbook for RIMS II regional output, earnings, or employment.
users.2 In 1992, BEA published a second edition of the RIMS II is widely used in both the public and private
handbook, in which the multipliers were based on more sector. In thepublic sector, for example, the Department
recent data and improved methodology. Now, BEA is ofDefenseuses RIMS IItoestimatetheregional impacts
making available a third edition of the handbook, in re- ofmilitary baseclosings, and State departmentsoftrans-
sponse to requests by users for additional discussion of portationuseRIMS II toestimatetheregional impacts of
the data that they must provide in order to use RIMS II airport construction and expansion. In theprivate sector,
and ofthe data sources and methods used for multiplier analysts, consultants, and economic developmentpracti-
estimation. Themultipliersinthethirdeditionreflect 1-0 tioners use RIMS II to estimate the regional impacts of
data for 1987, the mostrecent benchmarkyear forwhich a variety ofprojects, such as the development of theme
BEA's national 1-0 data are available. parks and shopping malls.
RIMS II is based on an accounting framework called This handbook comprises three additional sections of
an 1-0 table. For each industry, an 1-0 table shows the textand five appendixes. In the second section, the types
distributionofthe inputspurchased and the outputs sold. of RIMS II multipliers are discussed, and examples of
Atypical1-0tableinRIMS IIisderivedmainlyfromtwo their use are presented. In the third section, the informa-
data sources: BEA's national 1-0 table, which shows the tion that users of RIMS II must provide and the proper
input and output structure ofnearly 500 U.S. industries, use of RIMS II multipliers are discussed. In the fourth
andBEA'sregionaleconomicaccounts, whichareusedto
3. See U.S. Department of Commerce, Bureau of Economic Analysis,
1 SeeDanielH.Garnick,"DifferentialRegionalMultiplierModels"Jour- BenchmarkInput-OutputAccounts ofthe UnitedStates, 1987 (Washington,
nalofRegionalScience10(February 1970): 35-47;andRonaldL.Drake,"A DC: U.S. GovernmentPrintingOffice, 1994); andU.S. DepartmentofCom-
Short-Cut to Estimates ofRegionalInput-OutputMultipliers,"International merce,BureauofEconomicAnalysis,LocalAreaPersonalIncome,1969-92
RegionalScienceReview1 (Fall 1976): 1-17. (Washington,DC: U.S.GovernmentPrintingOffice, 1994).
2. SeeU.S.DepartmentofCommerce,BureauofEconomicAnalysis,Re- 4. Foradiscussionofthelimitationsofusing1-0modelsinimpactanalysis,
gionalInput-OutputModelingSystem(RIMSII):Estimation,Evaluation,and see Daniel M. Otto and Thomas G. Johnson, Microcomputer-BasedInput-
Application ofa DisaggregatedRegional ImpactModel (Washington, DC: OutputModeling(Boulder,CO: WestviewPress, 1993),28-46.
U.S. GovernmentPrintingOffice, 1981);andU.S. DepartmentofCommerce, 5. See RegionalInput-Output Modeling System (RIMS II), 39-57; and
Bureau ofEconomicAnalysis, RegionalMultipliers: A UserHandbookfor Sharon M. Brucker, Steven E. Hastings, and William R. Latham III, "The
theRegionalInput-OutputModelingSystem(RIMSII)(Washington,DC: U.S. Variation of Estimated Impacts from Five Regional Input-OutputModels,"
GovernmentPrintingOffice, 1986). InternationalRegionalScienceReview13(1990): 119-39.
1
REGIONAL MULTIPLIERS
section, four hypothetical case studies that illustrate use Appendix B presents a listofthedetailed industriesfor
ofthe multipliersare presented; the case studies focus on which multipliers are available, and appendix C presents
estimating the regional economic impacts of construct- a list of the industry aggregations for which multipliers
ing andoperating a sports facility,closing and converting are available.
a military base, closing a motor vehicle manufactur- Appendix D presents a sample of one of the four
ing plant, and opening a glass-container manufacturing detailed-industry tables that are available from RIMS II,
plant. and it presents a sample of one of the four aggregate-
In appendix A, the data sources and methods industry tables that are available. Appendix E presents
used in estimating the RIMS II multipliers are dis- information on BEA economic areas, which can help
cussed, and a list of suggestions for further reading is RIMS II users in their choice of regions for impact
presented.
analysis.
Availability ofRegional 1-0 Multipliers From RIMS II
For any region composed ofone ormore counties, RIMS II can provide two series oftables of1-0 multipliers: Series 1 is for detailed
industries,andseries2 is forindustry aggregations. Eachseriesconsistsoffourtables: (1) Outputmultipliers, (2) earningsmultipliers, (3)
employmentmultipliers, and(4) total final-demandmultipliers foroutput,earnings,andemploymentandtotal direct-effect multipliers for
earningsandemployment.
Table
designation Type of multiplier Industry composition
1.1 Final-demand output multipliers 38 row industries and 471 column industries
1.2 Final-demand earnings multipliers 38 row industries and 471 column industries
1.3 38 row industries and 471 column industries
1.4 Total final-demand output, earnings, and employment Totals of471 row industries
multipliers and total direct-effect earnings ana em-
ployment multipliers.
2.1 38 row industries and 38 column industries
2.2 38 row industries and 38 column industries
2.3 38 row industries and 38 column industries
2.4 Total final-demand output, earnings, and employment Totals of 38 row industries
multipliers and total direct-effect earnings ana em-
ployment multipliers.
Thepricesofthetables(twoseriesperregion)areonadescendingscale,startingat$1,500perregionforthefirstregionordered. Forfurther
information or to place an order, e-mail [e-mail],call [phone],orwrite to Regional Economic Analysis Division,
BE-61, BureauofEconomicAnalysis,U.S.DepartmentofCommerce,Washington,DC20230.