Adding LPP Imports, Direct Institution Change,

The IMPLAN manual(Page 154)states: LPP Imports displays the value of final demand that is lost from the Direct Effect as the cost of importing goods into the Study Area. This occurs as a result of Local Purchasing Percentage', 'LPP' being less than 100% for an Event or Events within an Activity. >>Note: Adding the LPP Imports, Direct Institution Change, and Direct Factor Change values with the Direct Output yields the total value towards Final Demand. I have often used that doublecheck as total program = LPP imports + direct impacts + 15000 codes transfer payments + Institutional Change + Direct Factor change. It works within a couple percent, except for using BOTH LPPs and Margins. See that attached example of purchasing $1 million of Farm Machinery in Arkansas. We know the amount spent is $1,000,000, farmer (retail) prices so we used margins. The above test shows $1,167,000 of impacts. I think the LPP Imports includes both the $193,221.18 in imported farm machinery; plus the $183,320 in Imports to the locally produced farm machinery and the Imports on the Marginal sectors. That is a double count of LPP Imports compared to using margins with 100% local purchase, or using RPC on farm machinery without margins.
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  • Hi David, We aren't sure exactly which reference you are looking at because we don't see this on any page 154's in the manuals we think you might be referring to, thus if this does not seem to be a correct response, please let us know. A couple of interesting things happen with LPP imports screen. Most, if not all of the examples in the Principles of Impact Analysis and IMPLAN Applications are done in the same year as the Model data year. This is because of the effect that deflation and market shares can have on LPP imports specifically. If you are modeling anything on a commodity basis, then the market share matrix will split the commodity value across the producing industries and then deflators are applied. Thus each individual commodity is deflated at it's specific Industry/Commodity rate. However, although the dollars going to imported values are deflated at these various rates there is only a single import inflation rate. So if your Model year and Dollar Year for View fields are not the same the sum won't be exact because of the effects of different rates of deflation only having a single rate of inflation to the Dollar Year for View as LPP Imports. This same type of compounding can occur when you apply Margins to a producing Sector because each component part of the final value will deflate to the Model year at it's specific Output Deflator, but will only have the single imports deflator for the LPP imports screen. If this doesn't seem to help, we'd be happy to dig further into what you are seeing. Would you be able to provide information about the Sectors you are choosing for farm machinery in both examples and what Event Year and Dollar Year for View you are using? Thanks!

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