I'm doing an impact analysis for the expansion of a local industry. I know the employment increase and associated wages. I have used that information to modify the sector data. I also know the absolute dollar value of their local vendor purchases. How do I include that information in the model? Do I adjust the local purchase coefficient and, if so, how? Thanks, Fletcher
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  • Changing the local purchase coefficient only effects how much of the employment increase is applied to the multipliers, it does not affect the multipliers themselves. Are the vendors the producers of the goods or are they resellers? If they are resellers, then only the markup is a local purchase, along with the manufacturer's value of only the locally manufactured goods. Chances are excellent that you don't have the necessary data required to edit the production function directly, but there is a convoluted method to affect the production function indirectly. Indirect Purchases = Output - Value Added. Local Indirect Purchases = Proportion of Indirect Purchases The proportion can be determined from the industry balance sheet for the industry about which you are concerned (see the reports appendix for a description of the industry balance sheet). The trick is to increase/decrease the other property income component of value added until the Local indirect purchases match your data. As value added increases, indirect purchases decrease and vice versa.
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  • Changing the local purchase coefficient only effects how much of the employment increase is applied to the multipliers, it does not affect the multipliers themselves. Are the vendors the producers of the goods or are they resellers? If they are resellers, then only the markup is a local purchase, along with the manufacturer's value of only the locally manufactured goods. Chances are excellent that you don't have the necessary data required to edit the production function directly, but there is a convoluted method to affect the production function indirectly. Indirect Purchases = Output - Value Added. Local Indirect Purchases = Proportion of Indirect Purchases The proportion can be determined from the industry balance sheet for the industry about which you are concerned (see the reports appendix for a description of the industry balance sheet). The trick is to increase/decrease the other property income component of value added until the Local indirect purchases match your data. As value added increases, indirect purchases decrease and vice versa.
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