True Total Impact

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    DougO
    Output = Value Added + Intermediate inputs Value Added = Employee Compensation + Proprietor Income + Other Property Income + Indirect Business Taxes Labor Income = Employee Compensation + Proprietor Income Tax Impacts are part of the various components of value added. Therefore, total impact = Output. Adding anything else to output double counts. Adding almost anything else to value added double counts.
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    rnieves7
    For total value, how can you calculate value added for an industry change activity?
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    DougO
    Not sure what you mean by "total value". The "Industry Sales" entered by the user in the impact event becomes the Direct Output in the impact results (assuming LPP=100% - ie, initital activity is 100% local) and may be deflated to model year if the event year is different than the model year. The direct value added impact is the value added associated with the direct output. Similarly the direct employee compensation impact would be the employee compensation component of the direct value added.
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    soniawatts
    Requesting further clarification, please. I ran the model and as an example, I am using simple numbers. Model results: Output = 10 Labor = 3 Value Added = 5 Tax = 1 Analysis: Total Impact = Output = 10 Output = Labor + Value Added + Tax 10 = 3 + 5 + 1 (9, not adding up) Questions: 1. Is the above Output equation correct? 2. If the above equation is correct then it is not adding up. Is it due to rounding in the model? Thanks.
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    jenny
    1. Not quite. Employment is not in dollars, so it is not a component of Output. Rather, it can be reported separately, along the lines of: The total Output impact is $10 and this Outptut supports 3 jobs. Taxes are a part of Value-Added, so to add them to Output along with Value-Added is double-counting. Since Output = Value Added + Intermediate Inputs, your figures mean that your intermediate inputs were 5. Output = Value Added + Intermediate Inputs Breaking out the 4 components of Value-Added: Output = Employee Compensation + Proprietor Income + Other Property Income + Indirect Business Taxes + Intermediate Inputs 2. It is not adding up because you are missing the Intermediate Inputs part of it.
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    soniawatts
    Thanks, Jenny. 1. With "Labor", I meant "Labor Income" which is in $ and is shown as part of the summary results after running the model. 2. How do you define "Intermediate Inputs"? What are its components? I can not find its definition in the Version 2.0 reference manual.
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    jenny
    1. Okay, great. Note that you still would not want to add this figure to Value-Added since Labor Income is a part of Value-Added (Labor Income = Employee Compensation + Proprietor Income). 2. Intermediate Inputs are the purchases of goods and services — such as energy, materials, and services — that are used for the production of the industry's output. These inputs are sometimes referred to as current-account expenditures. They do not include any capital-account purchases nor do they include the inputs from the primary factors of production (e.g., labor) that are components of value added. You can see each industry's Intermediate Outlay (i.e., the amount they spend on Intermediate Inputs) under Explore > Industry Accounts > View By: Industry Output/Outlay Summary. To see exactly which commodities and service an industry purchases as a part of its Intermediate Inputs, go to Explore > Social Accounts > Balance Sheets tab > View By: Industry Balance Sheet > Commodity Demand tab, then select the industry of interest from the drop-down menu. Gross Absorption tells you the percentage spent on that input per dollar of the industry's Output. Regional Absorption tells you the percentage purchased from [u]local producers [/u]of that input per dollar of the industry's Output.
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