Classification of capital investment

Hello - I curious about whether capital expenditures by a company are typically considered to be "indirect effects" (rather than direct or induced effects). For example, a ski resort might periodically make capital investments to help support or expand its operations (e.g. new chairlifts, new restaurants, etc.). Would those investments typically be thought of within the IMPLAN framework as indirect effects -- e.g. if we were to model $1 million consumer purchases at ski resorts (classified other amusement and recreation industries), would IMPLAN infer the ski area's normal capital expenditures, and assign/consider those as indirect effects? Or would capex typically be considered/evaluated by IMPLAN in some other manner; or would capex (in the case of this ski resort) be omitted from IMPLAN modeling unless it was specifically and separately introduced? If capex was omitted and had to be separately introduced, I presume it would be modeled in terms of $xxx in construction value or other applicable industry change? Thanks.
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  • Hi David, Thank you for your post! Capital Expenditures are not included in an industry's spending pattern. As the spending pattern consists of commodities that are used up every year, thereby purchased every year. In order to model your capital expenditure you will need to create a separate Activity from your other Activities. Then locate the appropriate Industry/Sector that best represents that capital expenditure. The following article will provide you with more information on capital expenditures: http://implan.com/index.php?option=com_content&view=article&layout=edit&id=468 When you are modeling the capital expenditure that will be your Direct Impact. However it will then have both a Indirect and Induced impact. Thank you!
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