Impacts in area not modeled


I am trying to verify the accuracy of a model done by a different economic analyst by generally re-creating it. They modeled the impacts of spending in several industries in several counties in state X. They reported impacts for each county as well as state X, and a neighboring state (state Y). Presumably, they did an MRIO analysis with direct effects distributed among the counties, and indirect and induced impacts allowed to accrue in the "rest of state X" and "state Y" regions.

When we bought our data, we only purchased data for the counties and state X (where the vast majority of the impacts occurred). We modeled the same levels of spending in the same industries, and used an MRIO analysis with a "rest of state X" region to capture additional indirect and induced impacts. 

Given this, would the results for "rest of state X" be the same between the two analyses? That is, would the absence of state Y in our analysis affect the impacts in the "rest of state X"? It seems like the impacts in the "rest of state X" should be the same regardless of whether or not we choose to document the impacts in state Y. Is that correct?

Thank you!

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  • Official comment

    Hello Elizabeth!

    This is not completely accurate. The original model will have captured the spillover effects to state Y as a result of the impact in state X. With the Indirect/Induced Output that is being captured in state Y, it is possible that Industries in state Y will need to source inputs or labor from state X, which would create further Indirect/Induced impacts in state X. If you do no include state Y in the MRIO analysis, these spillover effects from state Y to state X would not be captured, leading to a discrepancy in Results for state X in your approach.



    Michael Nealy

  • That helps alot! Thanks so much for clarifying. 



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