Simulating a Regional Economy Using an Input-Output Model

Input-output models provide relatively straightforward ways to get a snapshot of the size and nature of a regional economy. They are, therefore, a well-established technique for estimating economic activity and what they lose in accuracy, they make up in efficiency. Goldsim is an effective platform for building them because of its powerful scenario manager and input-output tables that can be used to test different "what if" scenarios. 

Geografia constructed an input-output model to evaluate the effect of various major projects in Blacktown City. Inputs were provided at the State level and corrected to account for the features of the Blacktown local government area's economy. Taxable income figures were used as the basis for this. Major changes in the employment profile of the regional economy as a result of the impact of major projects were reflected in interpolated changes to the multipliers. The model also provided a risk return analysis that estimated the per capita return on council investment in a specific project.