Rules of Thumb for Interpreting Economic Multiplie


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    IMPLAN Support
    Hi Subhash, I apologize for the delay of our response. If you did not already figure out the answer to your question, I have it posted below. An output multiplier of 1.75 for a given shock in exogenous final demand means that the initial shock has the direct impact of (1 x $1 million of exogenous increase in final demand) plus (.75 x $1 million) as the additional economic activity of producing the inputs to produce the output (indirect effect) as well as the additional spending by households from the additional labor income to produce the additional output and its inputs. The indirect and induced are almost always less than the direct effect. Therefore output multipliers are almost always less than two. Additionally, it will really depend on exactly what you mean by "develop the downtown" - that could mean any number of things! Are you putting in art sculptures, building new apartments, upgrading existing buildings, ....? Each of those would be modeled differently in IMPLAN and would have differing impacts. Thanks!
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