Economic impact multipliers for the Irish economy – latest available

Friday, February, 2015

The Central Statistics Office (CSO) published (16 December 2014) the latest Supply and Use Tables and Input-Output Tables for Ireland, which pertain to the year 2011.  

The newly published CSO data provide a symmetric input-output table of domestic product flows for over 50 sectors of the Irish economy (agri, manufacturing and services).  They can be used to derive economic impact multipliers to assess the knock-on effects of various stimuli to the Irish economy – such as, for instance, a new investment.  Such multipliers can also be used in cost-benefit analysis (CBA) as well as economic impact studies.

The new data follow a trend in which the CSO is publishing the information on an annual basis (data are now available for 2010 and 2011, whereas the previous data pertain to 2005). 

It is understood that the CSO’s equivalent in Northern Ireland (NISRA or the Northern Ireland Statistics Research Agency) is considering the compilation of supply and use/input-output data for that part of the UK, which would enable more accurate assessment of economic impact of various projects in NI (traditionally, the practice in NI has been for economists there to rely on estimated multipliers for other parts of the UK – Scotland).    

PMCA Economic Consulting has analysed the new data and confirmed the CSO’s Type I output multipliers, which show the effects on the value of output from an increase in final demand in the economy.  PMCA has also confirmed the CSO’s Type I income and gross value added (GVA) multipliers and has estimated the Type I employment multipliers plus the Type II output, income, GVA and employment multipliers for each of the sectors. 

Type I multipliers capture the indirect (intermediate-supply chain) effect as well as the direct impact of a given stimulus, while Type II multipliers go further and also include the effect of increased spending by households as a result of a stimulus.  The Type II multipliers are not produced by the CSO.

Estimation of Type I and Type II multipliers requires the construction of large matrices using the official data and then manipulation and inversion of the matrices (PMCA notes, by way of an aside, that matrices no longer feature on the Leaving Certificate Mathematics course).

As one would expect, for each of the output, income, GVA and employment multipliers, there is an appreciably large degree of correlation between the 2011 and 2010 estimates, with the 2011 estimates tending to be higher on average than the 2010 estimates, echoing the tentative recovery that was underway at the time in respect of real GDP (gross domestic product) and employment growth in Ireland. 

If you are interested in conducting an economic impact study and/or wish to contact PMCA in this regard, please use the contact facility on the homepage or ring the office (01 234 2507) or you can contact Dr. Pat McCloughan by email on pat@pmca.ie.

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