Estimating first round effects of indirect effect

Hi,

Thank you for your response! Is there a way of just getting the first round indirect effects by industry, as opposed all rounds of indirect/induced?

From this post: https://support.implan.com/hc/en-us/community/posts/115006937207-Indirect-Effects-of-Gas-Extraction, it looks like this might be possible through "Export the Activity". However, it looks like this was a past function on IMPLAN Pro, which is retired: https://support.implan.com/hc/en-us/articles/360035191994-IMPLAN-Pro-Activity-Options. Additionally, in reading through the post, I'm not sure how you would figure out the coefficient and LPP mentioned to get estimates, or if you would be able to see a breakdown by industry. Would you be able to provide any pointers on using this method (or any other method) to get at first round indirect effects?

Thanks!

Hello again!

So the table that I referenced in my prior response (Region Details > Social Accounts > Balance Sheets > Industry Balance Sheets > Commodity Demand, and filter on your Industry of interest), would in fact be reflective of the first round of Indirect Effects by Industry, as they would be only the Commodities purchased by each filtered Industry for production. Within this table there is a column for gross absorption, this is the percentage of all Industry Output for said Industry that is allocated to an Intermediate Input purchase. Dividing each gross absorption value by the total gross absorption row (at the bottom of the table) would give you the percentage of the total Intermediate Inputs purchased for each Commodity. You can do this most efficiently in excel, starting with downloading the table via the three vertical dots in the top right hand corner of the table. Within this table there is also a column for the RPC, or Regional Purchasing Coefficient - which is what the LPP would be set to whenever the 'SAM' checkbox is checked in an Industry Spending Pattern Event. 

Hope this helps!

Michael Nealy

Hi again!

Thanks Michael Nealy, this was helpful! I followed your instructions, and am looking at commodity demand for hospitals; colleges and universities; and local, state, and federal government using 2020 data. 

However, I'm not sure if it's appropriate to look at the government category--I combined IMPLAN industry codes 527 - 534, i.e. federal electric utilities, ..., other local government enterprises into one industry category in a custom schema. When looking at the regions industry commodity demand for government, my first category is the government combined industry that I created. I'm not sure how I should interpret this.

Is it appropriate to pull commodity demand for this combined government category? Why does the government category appear again within the industry breakdown? Does this simply reflect government spending on other government entities? Should government employment categories also be included (i.e., 541 - employment and payroll of state govt, other services)? I also noticed that IMPLAN industry codes 527 to 534 don't have NAICS equivalents. Why is this? Would it be correct to classify IMPLAN industry codes 527-534 as 2017 NAICS code 92, Public Administration?

Attached a screenshot of government commodity demand for reference.

Thanks!

Hello!

You pretty much hit the nail right on the head, this Commodity demand is going to be reflective of government spending on other government entities, such as local government passenger transit spending on other state government enterprises.

Regarding your question on Industries 527-534 in IMPLAN, which are Special Industries in IMPLAN. Per that article: IMPLAN Industries 526-534 represent government agencies that cover a substantial portion of their operating costs by selling goods and services to the public. They operate much like private sector firms, hiring labor and purchasing other inputs to produce goods that are sold through markets. Other Federal\State\Local government enterprises (i.e., those other than postal, electric utility, and transportation services) include things such as government owned and operated liquor stores, airports, sewer and sanitation services, gas, and water supply. This differs from Administrative Government Industries(components of consumption - i.e., final demand), because administrative Industries do not respond to local market demands.

Hope this helps!

Michael Nealy

Michael Nealy Thanks! Is there a way to get at the commodity demand for Administrative Government Industries?

Of course, happy to help!

The administrative government Industries(539-546) represent the payroll/Value Added of government Employment. These are Employment only Industries that are included as a bookkeeping element to account for government payroll, but these Industries do not demand Commodities. Of course, these government Institutions do in fact demand Commodities, but these Institutional demands are not accounted for via an Industry designation. Instead, they are included as a separate Institutional Spending Pattern - which can be modeled in IMPLAN via an Institutional Spending Pattern Event. 

Best,

Michael Nealy

Michael Nealy Great, I checked out Institutional demands to get estimates of government spending by category. I'm wondering how to interpret industry codes 11001 - 12004 (Federal Government Non-Defense, ..., State/Local Govt Investment). Are these totals and already accounted for in the previous Implan 546 industry categories? (I.e. hospital is a prior spending category.)

So if running an Institutional Spending Pattern Event for any of these aforementioned Institutions, you would be modeling a general spending distribution for measuring broad Institutional activity in your Region. These general Institutional Spending Patterns are unique in that they describe both Intermediate Inputs and Value Added within the same Spending Pattern (this is not the case with an Industry Spending Pattern, which only model's Intermediate Inputs). This results in these Spending Patterns producing 'mixed results'; where the reported Direct Effects describe both what we would generally consider Direct Effects (income, Employment and Value Added) and the first-round Indirect Effects that arise from the government spending its budget. This is why a recalculation process is necessary for this Event Type (per the example here).

I am not sure I understand your last question, "Are these totals and already accounted for in the previous IMPLAN 546 categories?", if you wouldn't mind elaborating on what exactly you mean here I can drill into it a little more!

Best,

Michael Nealy

Hi Michael Nealy,

I'm trying to get estimates for government spending by industry category for the United States at the 2-digit NAICS level. I followed your suggestion and pulled "Industry Accounts > Institution Industry Demand", and then combined the categories "Federal Government Demand and "State and Local Government Demand" into a single government demand category. I'm including a screenshot below for reference.

At the very end of this table, there are the following categories: 11001 - Federal Government NonDefense, 11002 - Federal Government Defense, 11003 - Federal Government Investment, 12001 - State/Local Govt Other, 12002 - State/Local Govt Education, 12003 - State/Local Govt Hospital and Health, and 12004 - State/Local Govt Investment. However, I'm not sure how to interpret these categories. (For example, there is already spending in IMPLAN industry 546 - Hospitals and there is a second category 11001 - State/Local Govt Hospitals and Health; is this spending on public versus state/local run hospitals? Or, for the federal defense and federal non-defense category--Aren't these two mutually exclusive categories: i.e. federal spending can be counted as defense or non-defense, and is already accounted for in spending from IMPLAN industry categories 1-546 in the prior rows?)

Additionally, IMPLAN industry codes 527-534 do not have NAICS crosswalks in the IMPLAN official crosswalk. Would they be correct to be coded within NAICS 92 - Public Administration? (which includes NAICS 92612 - Regulation and Administration of Transportation Programs).

In other words, what are the 2-digit (or 6-digit NAICS) equivalents of IMPLAN industry codes 527-534 and 11001-12004 (assuming they do have NAICS equivalents)?

Hello again!

While we are looking at Institution to Industry spending values in this table, what really is being bought and sold are Commodities. The Spending Patterns for Institutions (which include the “purchase” of labor) are much different than that of Industries (who only purchase Commodities as inputs to production, and thus will separate labor/payroll out of their Spending Pattern).

Commodities can be produced/sold/consumed by both Industries (1-546) and Institutions (10001-14002), and what we are seeing in this table is how the Institutional purchases of Commodities get traced back to the Industries and Institutions that produced/sold them. However, remember that some of these Industries are unique, such as the Administrative Payroll Industries 539-546. The “Commodities” that are produced/sold by these Industries are only labor costs, not actual goods/services.

So, when we see that the State and Local Government demand column has a transaction value with Institution 12001 – State/Local Government Other, this is an Institutional Commodity sales value. Take for example Commodity 3019 – Support Activities for Agriculture and Forestry, at the US level(2019) we can see from Study Area Data > Institution Commodity Demand, that the State and Local Government Demand Column has a value of $5.57B. That is how much of this Commodity 3019 that State and Local Government Institutions demanded in 2019.

Then, if we reference this with the Social Accounts > Commodity Balance Sheets > Industry-Institutional Production table (filtering on Commodity 3019), we see that the State/Local Govt Other Institution produces 7.357% of this Commodity at the national level. In the Institution Industry Demand table, when we see those Institutions having a transaction value with their own Institutions, these are what is being accounted for. One State/Local Government Institution purchasing a Commodity that was produced/sold by another State/Local Government Institution.

Regarding the NAICS codes for the special industries at the 2-digit level, IMPLAN 2-Digit NAICS 9A – Government Enterprises would be where Industries 526-534 would be captured. As far as the Institutions go: as these represent Institutional Commodity Sales values, they are not tied back to Industry production. As such these are treated as leakages in the model and will not be applied to the regional multipliers or produce any rounds of Indirect effects. In your case, the values here should be excluded from your analysis of first round Indirect Effects.

Best,

Michael Nealy