Discount rate/inflation

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    ScottL
    The models are all in terms of a single time period, one year. If you are entering activities for 35 years, you would set the event year to the year you want to model. We actually only carry out our deflators 20 years into the future. Setting the event year, however, assumes that the dollars you are entering are actually in terms of the year entered. That is a dollar value for 2015 is in 2015 dollars and not 2012 dollars spent in 2015.
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    jclements
    Does that mean I need to do my calculations outside of IMPLAN? E.g., if I enter an event into IMPLAN as occurring in 2015, I need to apply the discount rate outside of the model first?
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    jenny
    Hi Janet, All the relationships (and thus the multipliers) in the model are based on model-year prices, so the direct effect applied to those multipliers also needs to be in model-year dollars. So this is what the deflators do - they convert your 20XX dollars to model-year dollars before applying them to the multipliers. They adjust for the fact that a dollar today is not worth as much as a dollar last year due to inflation. You do not need to do the deflation yourself – you simply need to tell it which year your dollars represent (via the Event Year), then IMPLAN will deflate that value to model-year dollars for you. The point I think Scott was getting at was that if the money for the future expenditures is being set aside today, then that money is $2012 even if it is not spent until 2050 (in which case you would set Event Year to 2012). Please note that to ensure all values are deflated/inflated correctly, you need to set the Event Year before entering any values. You can then deflate/inflate the impact results to whatever year you'd like by changing the Dollar Year for View in the Scenario Results page. The Output Deflator converts the Industry Sales value to the year of the dataset, while the GDP Deflator converts the Value-Added values to the year of the dataset. The Output Deflators are specific to each industry, while the GDP Deflators are the same across industries. You can see the deflator values in the Setup Activities screen whenever you change the Event Year. As for the source of our inflators/deflators: The BEA has historical GDP and Output deflators which we use for past to current Output Deflators. For projections into the future, we use the annual rate of change in output from the BLS' employment growth model. Regarding discount rates, that is a separate adjustment that you would need to apply outside of IMPLAN.
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