economic impact of forest service's salary
I'm examining economic impact of a forest service. I'm particularly interested in impact of salary expenditure at this point. I consider two different alternatives in setting up the activity.
Alternative 1:Importing Federal Government NonDefense from Institution Spending Pattern.
Alternative 2: Use Industry Change for the activity type and bridge it with Sector 439: Employment and payroll only(federal government, non-military).
Scenario results show that alternative 2 has a lot larger impact. Could you help explain why? And which approach is more appropriate?
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Alternative 1 is the spending pattern of the Federal government, the spending on goods and services is the first round indirect. One of the spending items is for 439 - the payroll portion. The "direct" effect results has been reduced by imports. Alternative 2 is a special industry that contains the value added (employee compensation and capital consumption allowance -ie; other property type income) of the Federal government institution. When you apply an impact to this "industry" the entire value is reported as the "direct" effect - and the spending of the payroll shows up as induced. Alternative 3 - run the payroll through the Labor income activity type>employee compensation. The results will show the induced effects of the respending of the payroll - and the result will not be reduced by the "spending" on CCA. This result should be slightly larger than the induced effect reported by alternative 2 and is the most appropriate way of analyzing the payroll.0
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Doug, thank you so much. What does CCA stand for in alternative 3?0
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Capital consumption allowance - firms reduce the profits reported to IRS by a depreciation allowance. This depreciation is added back to value added (the CCA). Value Added is equal to Gross Domestic Product (GDP). GDP minus depreciation is Net Domestic Product. Social Accounts models are on a GDP basis. Administrative government does not report a "profit" to the IRS but the CCA is added in to so that GDP can be calculated.0
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Hi, Doug. I followed your suggestion and analyzed alternative 2 and 3. They produced the identical induced effect. The only difference is that alternative 2 (of industry change: sector 439) reports the direct effect as well as the induced effect, whereas alternative 3 only reports the induced effect. I'd just like to be sure if I missed anything since you mentioned alternative 3 should generate a slightly larger induced effect.0
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That indicates to me that the other property type income value added component for sector 439 was 0 (either originally or edited), in which case step two induced would be the same as step three.0
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Please find the results from both alternatives. In both cases, value added column is positive. Sorry to bug you so much.0
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Wasn't referring to value added in general, but the Other property type income (a component of VA).0
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