Let’s get this out of the way right off the bat. Intermediate Inputs were previously called Intermediate Expenditures in IMPLAN. Much like Prince (once known as only a Love Symbol) or Sean (middle name now “Love” not “Diddy”) Combs, sometimes we have to change names. And you will love this one!
We changed the title to be consistent with the definition and terminology of the Bureau of Economic Analysis (BEA). The BEA defines Intermediate Inputs as “Goods and services that are used in the production process of other goods and services and are not sold in final-demand markets.”
Intermediate Inputs are purchases of non-durable goods and services such as energy, materials, and purchased services that are used for the production of other goods and services, rather than for final consumption. They do not include any capital-account purchases or labor.
The first round of Indirect Effects are triggered by the Intermediate Inputs purchased by the Direct business or businesses when analyzing Industry Events, Commodity Events, Industry Contribution Events, and Institutional Spending Pattern Events. The amount of Intermediate Inputs is solely determined by the Event’s Direct Output and the relationship between Output and Intermediate Inputs according to the Direct Industry’s Total Gross Absorption. Further rounds of Indirect Effects reflect the ripple effect through the local Supply Chain. The local businesses affected in the first round of Indirect Effects also purchase Intermediate Inputs from local businesses, and so on.
Labor Income and Household Income Events do not generate any Indirect Effects but there are Intermediate Inputs still being analyzed in them. In these Events the income spent at local businesses is being estimated and analyzed. The Intermediate Inputs of the Inducedly affected business triggers further rounds of Induced Effects.
When using an Industry Spending Pattern Event the first round of Indirect Effects are triggered by the Intermediate Inputs being analyzed. The amount of Intermediate Inputs is solely determined either by the Event Value alone (by default Industry Spending Pattern Event Values are total Intermediate Inputs) or by the relationship between Output and Intermediate Inputs according to the specified Industry’s Total Gross Absorption when “Total Output” is selected in the Advanced Menu of the Event instead of Intermediate Inputs.
Industry Spending Pattern Events are appropriate when modifications to the Intermediate Inputs of an Industry’s Leontief Production Function are necessary. When detailed information is known about Intermediate Input spending, these Events can be used and adjusted to reflect the specific purchases or ratios of purchases. Industry Spending Patterns include all Intermediate Inputs for a given Industry.
Institutional Spending Patterns are unique in that they describe both Intermediate Inputs and Value Added within the same Spending Pattern. The Results in Institutional Spending Patterns differ: the reported Direct Effects describe both what we would generally consider Direct Effects (income, Employment and Value Added) and the first-round Indirect Effects that arise from the government spending its budget.
WHERE TO FIND IT IN IMPLAN:
ON THE REGIONS SCREEN
Intermediate Inputs represent the difference between Output and Value Added. To calculate Intermediate Inputs, head to the table in Region Details called Regions Industry Summary by navigating to
> Study Area Data
> Industry Summary
If we look at Industry 1 - Oilseed farming in Ohio for example, we can calculate Intermediate Inputs
= Output - Total Value Added
= $2,526,412,335 - $753,211,566.09
ON THE IMPACTS SCREEN
On the Impacts screen, you can see the Spending Pattern for Industries by choosing the Industry Spending Pattern Event Type or for Institutions by choosing the Institutional Spending Pattern Event Type. By clicking on the menu icon and choosing Advanced, you can see the list of Commodities purchased as inputs by that Industry or Institution.
ON THE RESULTS SCREEN
The Summary Results has a table entitled Economic Indicators by Impact. To calculate the Intermediate Inputs, simply take Output less Value Added. Therefore in this example, Intermediate Inputs
= Output - VA
= $829,827 - $392,848
HOW IS IT CALCULATED?
IMPLAN defines Intermediate Inputs as:
Or more simply,
So to calculate Intermediate Inputs, we just take Output less the other four components of the Leontief Production Function (which sum to Valued Added).
Written February 26, 2020