Archive for the 'Input-Output' Category

BEA to Release Modified Regional Input-Output Model in 2015

The Bureau of Economic Analysis plans to release in 2015 a modified economic model to replace the original Regional Input-Output Modeling System (RIMS II).  Cost savings will be realized because the modified model will be updated less frequently.

Much like RIMS II, the modified model will produce regional “multipliers” that can be used in economic impact studies to estimate the total economic impact of a project on a region.

However, the modified model will be updated with new input-output (I-O) data only for benchmark years.  That is — years ending in two and seven.  The modified model will become available to customers in 2015 and incorporate 2007 benchmark I-O data and 2012 regional economic data.

Last year, as a result of budget sequestration and reduced funding levels, BEA discontinued updates to RIMS II.  Orders for RIMS II multipliers, however, have continued to be accepted because the cost of fulfilling these orders is covered by a nominal processing fee.

After investigating ways to continue to meet the analytical needs of our customers but do so at a lower cost to BEA, the bureau decided to make a modified economic model available. Until the modified model is available in 2015, customers may continue to buy RIMS II multipliers.

BEA’s Industry Economic Accounts to Hit Major Milestone

Roughly every 5 years, the Bureau of Economic Analysis (BEA) releases comprehensive revisions of its major economic accounts. These revisions are generally more detailed than annual revisions, implementing changes in methods, statistics and definitions to better reflect an ever-evolving economy. In December, BEA will release the 2013 comprehensive revision of the Industry Economic Accounts (IEAs), which includes two main sets of statistics, the annual industry accounts and the benchmark input-output (I-O) accounts. That will follow the release in July of a comprehensive revision of the National Income and Product Accounts (NIPAs), or GDP accounts.

The upcoming comprehensive IEA revision will mark a significant milestone: the full integration of the IEAs with the NIPAs, which was first suggested in a March 2004 article in the Survey of Current Business and later amplified in other articles. This enhanced integration, which has long been recommended by economists, will allow for a higher degree of consistency among these widely followed accounts, offering a more consistent view of industry dynamics within the overall economy.

A preview of the 2013 comprehensive revision of the IEAs was published in the June 2013 issue of the Survey.

Learn More About the Ocean and Great Lakes Economy on BEA’s New Web Portal

How many jobs are created from the construction of a new bridge or an increase in tourism?

The Bureau of Economic Analysis’ (BEA) new Web portal on the ocean and Great Lakes economy shows how the Bureau’s Regional Input-Output Modeling System (RIMS II) can be used to provide answers to such questions. The new Web site stems from a joint project with the Commerce Department’s National Oceanic and Atmospheric Administration.

RIMS II, a regional economic model, is used by investors, planners, and elected officials to objectively assess the returns to projects ranging from a new sports stadium to a new bridge. The returns include the short- and long-term increases in jobs and spending associated with the projects.

The idea behind the results of RIMS II is that an initial change in economic activity leads to additional changes in economic activity in other parts of an economy—for example, building a new bridge leads to increased production of concrete and steel. The increased production of concrete and steel leads to more mining. Workers benefiting from these increases may also enjoy bigger paychecks, so they may then spend more by eating out at nicer restaurants or splurging more on entertainment.

Planners and policymakers use RIMS II to compare the regional impacts that are likely to occur from proposed projects. That helps them make decisions related to the allocation of resources. That’s why RIMS II appears on the new Web site, which showcases BEA’s regional information on the ocean and Great Lakes economy. Findings based on the model are typically reported in “economic impact studies,” which are cited to support major spending decisions by both the public and private sectors.

The new Web portal highlights the wide range of questions that can be answered with the help of RIMS II. Here are a few of them:

  • How many jobs are supported by the fish processing industry in Bellingham, WA?
  • How much will workers’ earnings increase if an additional 500,000 tourists visited Myrtle Beach, SC, because of a developmental project to beautify its beaches?
  • How much will workers’ earnings increase solely from the new spending of these tourists at local retail stores?
  • How much will workers’ earnings increase if a new $2.5 million bridge was built to improve access to a public beach in St. Augustine, FL?

The examples also provide tips on how RIMS II can most effectively be used. The bridge example shows how the model can account for the specific details related to a particular construction project. Because the proposed bridge will be built out of precast concrete parts, the labor costs are relatively low for the cost of the project. By using the “bill-of-goods” method, the resulting estimate reflects the smaller impact the project will have on workers’ earnings across the region.

You can find the answers to the questions posed above by visiting the new portal for the ocean and Great Lakes economy. Additional information for RIMS II is also available on the BEA Web site.