The 2002 Washington Input-Output Model
Updated April 2011
In 2006, seven state agencies and the legislative staff, under the direction of University of Washington Geography Professor, Dr. William Beyers, and the Office of Financial Management (OFM) Assistant Director of Forecasting Division, Dr. Irv Lefberg, initiated the estimation of a new version of the Washington State Input-Output model. OFM staff Dr. Ta-Win Lin served as the project coordinator.
The Washington Input-Output Study
This input-output study represents a new estimate of the structure of the Washington economy. Economists from participating state agencies helped conceptualize the new modeling effort, and helped compile, estimate, and review data and industry information used as inputs for this model. At the heart of this new model was a survey of businesses in the Washington economy. Over 1400 establishments responded to this survey. The survey data were used with other benchmark information to create the new input-output model.
The state I-O table provides a detailed and complete picture of the state’s economic structure, including interindustry linkages, and the economy’s dependence on U.S. domestic and international markets. Chapter 1 describes the 2002 table.
The 2002 study represents the seventh estimate of an input-output model for the Washington economy. The first table (based on the year 1963) was published in 1967. Subsequent state input-output tables were constructed for the years 1967, 1972, 1982, 1987, and 1997. The 1963, 1967, 1972, 1982, and 1987 tables were largely based on surveys of industrial establishments in Washington State. The 1997 table was estimated using a non-survey approach, and was based on the structure of the 1987 table. Chapter 2 describes the industrial sectors defined in the 2002 table, and data sources and methodologies used in the construction of the table.
The input-output table provides estimates of the interdependence of industrial sectors in the state economy. It reports the distribution of sales and purchases of each sector in the state economy. It reports business sales to industrial sectors and to final demand categories (households, investors, and governments) located in Washington State, as well to markets outside Washington State (exports to other parts of the United States, to foreign countries, and to the federal government). The table also identifies purchases made by sectors from Washington industries, payments of labor income and other value added, and purchases made out-of-state.
The input-output table can then be used to build a model that traces out the circular flows associated with these purchases and sales relationships. The input-output model can be formulated so that it can be used as an analytical tool allowing estimation of ripple effects on the state economy as a result of these interdependencies. Two spreadsheets are provided that assists users in conducting economic impact analysis with this model – one for simple analysis and another for complex analysis. Chapter 3 discusses these impact models and describes how to use them.
The estimated ripple effects on the state economy resulting from an external change, can be summarized into the “multiplier” concept. Input-output models can be used to estimate various types of multipliers. They simply show, given a specified economic change, the total impact on the state economy. This impact can be depicted in several ways, and Chapter 4 reports several estimates of multipliers for quick reference. In this chapter, employment, income, and output multipliers are reported.
Last updated: April 4, 2011