Government of Yukon

Economic Impact Calculator

This tool can be used to derive the general economic impact of increased output in a Yukon industry using preliminary 2005 based Input Output Multipliers from Statistics Canada. Note that some data that is considered confidential is indicated as such in the results this tool provides; Industries where data is not observed for Yukon have been removed from the tool options. For more information on the use of this tool and IO multipliers please see the description below or email economics@gov.yk.ca

To start the tool, please click here.

Input Output Tables

Originally developed by Wassily Leontief in the late 1930’s and used extensively by the U.S. for systematically targeting industries contributing to the German war effort in World War II, input-tables have been a widely used tool for decades. The input-output modeling provided by Statistics Canada is acknowledged as some of the best available in the world.

I-O models capture and decompose the entire production process of commodities in the economy. I-O commodities include both goods and services. I-O tables are highly detailed linear mathematical models of the economy which trace the spending by various industries or commodity groups for a given period.

I-O Multipliers

I-O multipliers are derived from I-O tables and show the impact of spending in a certain industry on various economic variable including GDP, employment, output and wages and salaries, etc.

I-O multipliers can be derived from open (type I) I-O models or closed/partially closed (type II) models. Open models show the direct effects of spending in a particular industry as well as the indirect effects of additional activities undertaken by industries who increase their activity in response to the direct spending. Partially closed models re-circulate the labour income earned as a result of the initial spending through other industry and commodity groups to estimate induced effects. The addition of induced effects in partially closed models more closely proximate Keynesian spending multipliers than open models, which provide direct and indirect effects only.

Since 1990, Statistics Canada has discontinued providing multipliers based on partially closed models as many analysts were improperly applying the higher induced effect multipliers, often inflating the benefits of projects and spending proposals.

Statistics Canada provides multipliers at various levels of detail: “W” (worksheet) is the most detailed with "L", "M" and "S" levels having a greater degree of aggregation.

As well, I-O models are developed at a national or inter-provincial level. The national level shows impacts in the provincial (territorial) economy and the national economy. Inter-provincial model distribute national impacts across the provinces/territories and thereby measure inter-provincial trade flows.

The Yukon I/O multipliers

Yukon Economic Development has obtained a set of 2005 Preliminary Yukon multipliers at all levels. These provide the following sets of multipliers:

  • GDP by component:
  • Wage and Salaries
  • Supplementary Labour Income
  • Mixed Income
  • Other operating surplus
  • Indirect taxes on products
  • Subsidies on products
  • Subsidies on production
  • Indirect taxes on production
  • Output
  • International Imports
  • International Exports
  • Employment per $million spending


These multipliers are aggregated at three levels: direct impacts in the Yukon, total direct and indirect impacts in the Yukon and total direct and indirect impacts for Canada.

Limitations

While I-O multipliers can be a rich source of information, they also have some limitations. These include:

I-O models treat all inputs as complements and excludes substitutes implying that increases in the demand for one input will only lead to demand increases for other inputs. The I-O model does not consider price-adjusting behaviour or substitution effects.

Because the model is entirely open, there is no scarcity of resources. The economy is assumed to have limitless amounts of all the inputs it requires.

I-O models produce a snapshot of the economy at a given point in time. Structural changes in the economy over time will reduce the validity of results produced by I-O models.

Statistics Canada no longer provides multipliers from partially closed models to produce induced-effects multipliers resulting from re-spending of labour income within the economy. Therefore, I/O multipliers differ significantly from true Keynesian multipliers, which include both indirect and induced multiplier effects.

Analysis based on I-O models does not explicitly consider alternatives and tends to show only benefits of expenditures while ignoring costs.

The impacts considered through the I-O model are short-term and at the margin: there is no consideration of whether the economy has the capacity to incorporate the changes and whether changes in production are sustainable or cost competitive.

Given these limitations, I-O multipliers can still provide a useful, but rough, initial indication of the economic impact of changes in spending in different industries.

Reference Documents

Main reference documents relating to use of the I-O tables and to the national accounts have not been updated for some time, but include:

Other reference documents include:

  • Alberta Bureau of Statistics. Economic Mutlipleirs for Alberta Industries and Commodities, March 1984.
  • Genereux, P.A. The Input-Output Structure of the Economies of the Yukon and Northwest Territories, 1984. Statistics Canada May 1991.
  • Miller, Ronald E. and Blair, peter D. Input-Output Analysis: Foundations and Extensions. Englewoods Cliffs, N.J. Prentice Hall 1985.