Both Margins and Deflators are included in the IMPLAN database. Margins allow for consumer expenditures to be traced though retail, wholesale, and transportation sectors back to the industries who manufactured the product. This allows Final Demand values to be appropriately allocated to the producing Sectors. Built-in Deflators allow for adjustments of the initial impact input dollar event entry and/or of your impact results to the dollar year in which your demand/result is occurring.
Most Input-Output models, including IMPLAN, record expenditures in producer prices. This allocates expenditures to the Industries that produce the goods or services. Any expenditures/sales the user wishes to apply to multipliers that are in purchaser prices (prices paid by final consumers) need to be converted to producer prices or allocated to the producing Industries. Margins enable the move from producer to purchaser prices or vice-versa.
Below is an example to show how a purchase is allocated with Margins. Assume that a consumer spends $1.00 at a retail store. A portion of that dollar, 20 cents in this case, is retained by the retailer. A portion, 10 cents, of the dollar is paid to the wholesaler and so forth until the dollar is fully allocated. Industry Margins are derived from the Bureau of Economic Analysis Input-Output tables.
Margins are particularly important for Personal Consumption Expenditures (PCE) values as nearly all household purchases of goods are through a retail sector. The Margins used to form the PCE data elements are compiled from the BEA Detailed Benchmark tables. This data provides the Margins associated with each of the different Personal Consumption categories. These PCE categories are modified to fit IMPLAN Sector definitions.
Deflators are used to adjust for relative price changes over time.
Output deflators are sector specific and are used to adjust sector output. GDP deflators are not sector specific and are used to adjust Final Demand and Value Added. Output and GDP deflators from the BEA are used for all past years, while BLS output deflators are used for future years.
The BEA Output deflators are provided with the BEA Gross Output data. The BEA GDP deflators come from NIPA Table 1.1.9 - Implicit Price Deflators for Gross Domestic Product. The BLS produces time-series of output estimates for its Employment Growth Model. The outputs are projected in real and constant dollars. This gives implicit price index projections which are the basis for projections of the IMPLAN deflators.
Both the BEA and BLS deflator data have fewer sectors than the IMPLAN sectoring scheme; therefore, all IMPLAN sectors within a single BEA or BLS sector will have the same deflator.