In the video below, an Emsi specialist describes the dos and don’ts of the Input-Output model. This model provides insight into the ripple effects caused by sales revenue gained or lost across various industries. Though sales revenue is the base unit, you can convert the revenue into jobs or earnings to see the impact in those areas as well.
During a period of economic uncertainty, this insight can be used to project various scenarios before they’ve happened. However, there are a few precautions to keep in mind; for example, this model is structured to show a fixed economy, meaning that it does not take into account factors such as timeframe, politics, or a global pandemic.
Read on for a summary of the video, or watch the video at the bottom of the page.
What is the Input-Output model? A model that describes an area’s industries and the money that flows between them, taking into account civilian and government spending, taxes, etc.
Types of Models:
Type 1: Shows industry to industry transactions, but doesn’t use induced effect. Best for large scale instances, such as dealing with the nation as a whole or broad areas of the US that are mostly self-sufficient.
Type 2: Type 1 model + household spending. Best used for state and smaller regions when looking at shorter term scenarios that are not likely to factor in amortized investment and government.
Type Emsi (featured in Emsi tools) Type 2 model + additional amortized investment and government spending. Best used for long-term regional scenarios.
Things to Remember About the Model:
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