BEA RIMS II and Lucky Charms
Recently I have had number of questions concerning the Bureau of Economic Analysis (BEA), Regional Input-Output Modeling System, or RIMS II, data set. I use these data primarily for scoping, to determine whether there are any surprises in the economic study region that may help me formulate a plan. It performs superbly in this application. From the RIMS II handbook pp1:
“Using RIMS II for impact analyses has several advantages. RIMS II multipliers can be estimated for any region composed of one or more counties and for any industry or group of industries in the national I-O table. The cost of estimating regional multipliers is relatively low because of the accessibility of the main data sources for RIMS II. According to empirical tests, the estimates based on RIMS II are similar in magnitude to the estimates based on relatively expensive surveys. To effectively use the multipliers for impact analysis, users must provide geographically and industrially detailed information on the initial changes in output, earnings, or employment that are associated with the project or program under study. The multipliers can then be used to estimate the total impact of the project or program on regional output, earnings, or employment.”
RIMS is a solid input-output modeling system for the right phase of a project because it is able to provide final multipliers for many different industries. However, this is where the capability ends. It is like eating a bowl of Lucky Charms. You can find yellow moons, orange stars and green clovers the marshmallows, but no meat and potatoes. In this case, the good stuff is the impact on affected local industries. With RIMS it is necessary to know that information up front, which is unlikely. From the handbook manual case study, pp15:
“These changes consist of the decline in the purchases of goods and services that results from closing the military base and the decline in purchases by military personnel. For both types of purchases, the user must determine which purchases occur in the economic area and then must show these purchases in producers’ prices.”
So although we know something about direct industries – likely a guess determined through a review of an available budget – we have no way of knowing the relationships of these impacts to the broader economy other than the multiplier, which gives us an accurate, yet gross estimate of impacts.
Below is an example of the RIMS II output, pp18:
Missing from the basic calculation are the indirect, induced and industry details such as taxes, proprietor income and relationship of these data to other regions either within or outside the study area. In other words, we do not have a complete picture of the money flows as a result to a change in the economy. Although some calculations can be completed using Type I and Type II data, it is these missing details that fill out the play book for a competent economic development analysis and subsequent plan.
