Benefit-Cost Analysis: Financial and Economic Appraisal Using Spreadsheets

By Harry F. Campbell; Richard P. C. Brown | Go to book overview

13
Economic Impact Analysis

Introduction

A large project, such as construction of a major highway or development of a large mine, will have a significant impact on the economy. The spending in the construction and operating phases will generate income and employment, and public sector decision-makers often take these effects into account in deciding whether or not to undertake the project. An economic impact analysis is a different procedure from a cost-benefit analysis in that it attempts to predict, but not evaluate, the effects of a project. Since the data assembled in the course of a cost-benefit analysis are often used as inputs to an economic impact analysis the two types of analyses tend to become related in the minds of decision-makers and may be undertaken by the same group of analysts.

In this Chapter we survey briefly three approaches to economic impact analysis: the income multiplier approach; the inter-industry model; and the computable general equilibrium model. Use of the latter two approaches involves a degree of technical expertise and would generally not be undertaken by the non-specialist. In discussing economic impacts we emphasize that these are not the same as the costs or benefits measured by a cost-benefit analysis. However there may be costs and benefits associated with the project's economic impact and the decision-maker may wish to take these into account.

The decision whether or not to take the multiplier or flow-on effects into account in the evaluation should be based on an assessment of the extent to which similar such effects would or would not occur in the absence of the project in question. When choosing between alternative projects this would depend on the extent to which the multiplier effects can be expected to vary significantly between the alternatives; when faced with an accept vs. reject decision for a discrete project the analyst would need to assess whether the same investment in the alternative, next best use could be expected to generate multiplier effects of the same or similar magnitude. These points are taken up again in the discussion of the multiplier effects.


Multiplier Analysis

The Closed Economy

For simplicity, the concept of the national income multiplier can be developed in the context of a closed economy – one that does not engage in foreign trade. This simplifying assumption will be dropped later in the discussion.

-288-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited page

Bookmark this page
Benefit-Cost Analysis: Financial and Economic Appraisal Using Spreadsheets
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this book
  • Bookmarks
  • Highlights & Notes
  • Citations
/ 345

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.