Methodologies of Economic Impact Analysis: An Overview

Abstract

There are two basic ingredients to an economic impact analysis: an estimate of the exogenous or differential stimulus that serves as the direct impact, and a model of the regional economy that will produce estimates of the indirect effects.¹ Perhaps due to increased demand for economic impact statements by various levels of government there has been a fairly dramatic increase in modeling efforts in recent years. Methodological innovations resulting from these research efforts have produced an almost infinite variety of models that resist categorization. Economic base multipliers are estimated with econometric techniques,² input-output models are treated as econometric models,³ and hybrid models are constructed that may combine elements of economic base, econometric, and input-output models.⁴ There are aggregate and disaggregate models of all types so that even the level of aggregation cannot serve as an alternative classifying variable.⁵