Balancing Problem


1 comment

  • Official comment


    Thank you for your question. From your post, I believe I understand that you've taken the total employment in the region for sectors 9, 74 and 75 and run them through the respective sectors as Industry Changes. This resulted in additional impacts, causing the results to be above and beyond what IMPLAN says exists in the region for these sectors. 

    This is happening because in IMPLAN, running a standard analysis assumes the impact is a new impact, as we define "economic impact analysis" as "new" activity in the economy. When modeling existing contributions to the economy, as you are in this case, we call this "economic contribution analysis". 

    As you have identified perfectly, economic impact analysis will generate buy-backs to the industry (one firm in the industry may purchase from another). For this, reason, it is our rule of thumb to use the contribution analysis method whenever trying to model the impact of 50% or more of an industry in a region. This 50% rule has been established to assume that before 50% (say the contribution of one firm) the sector buying from itself is appropriate and to be expected. Beyond 50%, (and especially in your case, modeling 100% of the industry in the region) the sector buying from itself will overestimate the contribution since you have already modeled all the contribution to the sector that you want to see in the results. 

    You should actually be using our Multi-Industry Contribution Analysis approach to restrict those buy-back impacts from being generated.

    Thank you,

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