Hi: I am attempting to model a scenario in which a new deduction in taxable income is introduced into a local region. In this case, I believe the correct procedure is to input the total dollar amounts that will be saved by households as a Household Income Change. This will then model the effects through an Induced Impact. However, I am struggling with the interpretation of this set of results. In short, why is a positive change in household income modeled as an induced effect - rather than as a direct effect? Why does new spending activity by a business generally get modeled as a direct effect (which then leads to subsequent rounds of spending activity) while new spending activity by a household does not? Thank you for this clarification.
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