BEA_RIMS_Redesign/RIMSIIAssumptions.html at master · CommerceDataService/BEA_RIMS_Redesign · GitHub

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    <p>
        RIMS II multipliers are based on the average relationships between the inputs and outputs produced in a local economy.
        The multipliers are a useful tool for studying the potential impacts of changes in economic activity.
        Analysts are encouraged to carefully evaluate how closely these assumptions apply to their projects and to consider collecting additional information specific to their project to adjust their results as they may be upper bound.
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    <br />
    Assumptions of the model to keep in mind:
    <p>
        Firms have no supply constraints—Input-output based multipliers assume that industries can increase their demand for inputs and labor as needed to meet additional demand. If local firms are already operating at full capacity, then additional inputs may need to come from outside the region, thereby reducing the local impact.
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        Firms have fixed patterns of purchases—Input-output based multipliers assume that an industry must double its inputs to double its output. If a firm can increase its output without hiring additional employees and without purchasing additional inputs, then the impact of the change on the local economy will be smaller than the impact that is estimated using a full multiplier.
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    <p>
        Firms use local inputs when they are available—The method used by RIMS II to develop regional multipliers assumes that firms will purchase inputs from firms in the region before using imports. If a clothing manufacturer located in an area that produces textiles, purchases its textiles from outside the region, then the impact of a change in clothing production on the local economy will be smaller than implied by the full multiplier.
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    <p>
        It is also worth keeping in mind that employment changes include both full and part-time jobs—this characteristic applies for all projects, but is especially important for service industries that have large shares of part-time employment.
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    <p>
        The example below for a construction project for a healthcare facility shows how the employment multiplier for a region can vary when local information is used to improve the accuracy of the multipliers.
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