using GDP deflators for future projections

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    IMPLAN Forum
    Hello, IMPLAN data represents a single snapshot in time. Deflators only account for relative price changes over time. Thus the 2021 Output and GDP deflators adjust 2021 dollars back to 2013 dollars, the 2013 dollars and those relationships in the Model are used to calculate the impact, and then these same deflators are used to adjust the dollar values back to 2021 dollars. You might find this article interesting if you want to dig more deeply into the [url=http://implan.com/index.php?option=com_content&view=article&id=377:377&catid=222:222]underlying assumptions of the Model[/url]. The Bureau of Labor Statistics (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. The BLS growth model has fewer sectors than the IMPLAN 536 sectors scheme. All IMPLAN sectors within a single BLS sector have the same deflator. To get deflators for value added components of the data, implicit GDP Deflators from BEA's Survey of Current Business are used. Hopefully this helps --Implan Support Staff
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    Laurel Lucia
    Thank you. That is helpful. One thing I am still confused about is the reference to the BLS employment growth model. Are you simply saying that the price change estimates happen to come from that model? Are any assumptions about employment growth taken from that model for purposes of the deflators?
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    Laurel Lucia
    And one more question regarding employment effects - when I am running a 2021 event using 2013 data, how are the employment effects adjusted, if at all, to account for changes in the economy over time?
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    IMPLAN Forum
    The BLS provides estimates of current and 20-year projections of employment, income, output, and deflators. We use the "Industry output chain weighted deflators" for current year and 20 years out (2014 and 2024 are the latest to be released, 2012 and 2022 were used when estimating the 2013 IMPLAN deflators) to calculate an annual growth rate of the deflators. Thus, we do not include/use any assumptions about employment growth for purposes of the deflators. The BLS data and documentation can be found here: http://www.bls.gov/emp/Industry-Employment/industry.zip Because IMPLAN is a linear model, it assumes that the economy will behave the same way (i.e., same productivity rates, same input purchase rates, same trade rates, etc.) in 2021 as it does now (2013 in your case). The only thing the deflators do is adjust for the estimated/expected change in the value of a dollar over time. We hope this helps - please let us know if we can provide any additional information!
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