Bureau of Economic Analysis
RIMS II Model
John Barrett
Principal
Performance Economics LLC
IIUSA: EB-5 Regional Center Advocacy Conf & Annual Meeting
Washington, DC
May 10, 2011
Goals of the Presentation
 What is the RIMS II model?
 Why use RIMS II for EB-5 economic impact?
 How to properly use the RIMS II model to
estimate job creation for an EB-5 project.
 Examples of RIMS II application.
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What is RIMS II?
 Regional Industrial Multiplier System (RIMS) of Input-Output (I-O)
tables from the Bureau of Economic Analysis.
 Based on national annual and benchmark I-O table and regional
data.
 Latest RIMS II based on 2002 national benchmark I-O table and
2007 regional data.
 Multipliers measure the economic impact of a change in final
demand (spending) on output, value added, earnings and
employment on a region’s economy.
 Provides six types of input-output multipliers for any county or multicounty area in the United States
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Type I and Type II Multipliers
 Type I multipliers
 Industry impacts only
 Total Impact = direct + indirect
 Type II multipliers
 Industry impacts and household spending
impacts
 Total Impact = direct + indirect + induced
 More commonly used than Type I Multipliers
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RIMS II Multiplier Definitions
Multiplier
Definition
Final-demand output
Total dollar change in output that occurs in all industries
for each additional dollar of output delivered to final
demand in the industry of interest
Final-demand earnings
Total dollar change in earnings of households employed
by all industries for each additional dollar of output
delivered to final demand in the industry of interest
Final-demand value added
Total dollar change in value added that occurs in all
industries for each additional dollar of output delivered
to final demand in the industry of interest
Total change in number of jobs that occurs in all
Final-demand employment industries for each additional 1 million dollars of output
delivered to final demand in the industry of interest
Direct-effect earnings
Total dollar change in earnings of households employed
by all industries for each additional dollar of earnings
paid directly to households employed by the industry of
interest
Direct-effect employment
Total change in number of jobs in all industries for each
additional job in the industry of interest
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Types of Projects RIMS II Can
Model





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Bringing new power plant online
New infrastructure facilities, i.e. ports and airports
Opening and closing of manufacturing facilities
New retail establishments
New stadium construction
Tourism spending
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Advantages of Using RIMS II
 USCIS believes RIMS II “facilitates transparency”*
 Level of industry detail available in RIMS II
 Constructed with consistent set of government data,
comparable across regions
 RIMS II proven to be just as accurate as regional I-O
models based on costly surveys
 Relatively lower cost compared to other models
 Proven track record over three decades
*EB-5 Immigrant Investor Program Stakeholder Meeting, California Service Center, March 17,
2011
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RIMS II Project Setup
 What is the project being studied?
 What is the geography of the study area?
 What is the source of the change in final
demand?
 How large is the change in final demand?
 What is the timing, how long will the project
last?
 Which industries are directly affected?
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RIMS II Example 1: Construction of
New Office Building
Question
Answer
What is the project being studied?
Impact of new capital spending project. How
many jobs will be created?
What is the source of change in final
demand?
New construction
How large is the change in final demand?
$100 million construction cost.
How long will the project last?
33 months
Which Industries are affected?
New Construction (NAICS 230000)
Geography of the study area?
Burlington, VT MSA
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Results for Construction Using Type II
Final-Demand Multipliers
1.7645
$100 million
x
final-demand
output multiplier
$176.5 million
=
total output
0.5070
$100 million
x
final-demand
earnings multiplier
$50.7 million
=
total earnings
16.5696
$100 million
x
final-demand
employment multiplier
1657
=
total jobs
0.9451
$100 million
x
final-demand
value-added multiplier
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$176.5 million
=
total value-added
RIMS II Example 2: Operation of New
Grocery Establishment
Question
Answer
What is the project being studied?
Impact of new retail grocery establishment.
How many jobs will be created?
What is the source of change in final
demand?
New retail grocery sales
How large is the change in final demand?
$30 million in annual sales
How long will the project last?
Ongoing
Which Industries are affected?
Retail trade (NAICS4A0000)
Geography of the study area?
Baltimore, MD MSA
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Split Retail Sales into Distribution
Costs and Margins
Margins and Transportation Costs
NAICS
Producer
Value
Rail
Value
Truck
Value
Water
Value
Air
Value
Wholesale
Margin
311000
Food
Manufacturing
450,170
2,791
312110
Soft Drink
Manufacturing
32,783
8
3122A0
Tobacco
Manufacturing
47,464
-
9,422
111
331
57,996
109,091
629,912
495
8
14
8,735
13,345
55,387
4
15,020
11,525
74,589
Total
530,417
2,799
10,493
348
81,752
133,960
759,888
Percent
of purchase
price
0.6980
0.0037
0.0138
0.1763
1.0000
577
119
0.0002 0.0005
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0.1076
Retail
Margin
Purchase
Value
Parsing the Change in Final
Demand
Purchaser Price to Producer Price
Producer
Value
Rail
Value
Truck
Value
Water
Value
Air
Value
Wholesale
Margin
Percent
0.6980 0.0037 0.0138 0.0002 0.0005
0.1076
of purchase
price
Change in Final
$ 20.94 $ 0.11 $ 0.41 $ 0.00 $ 0.01 $
3.23
Demand
(Millions of $)
$
Retail
Margin
Purchase
Value
0.1763
1.0000
5.29
$ 30.00
 Only the $5.29 million represents change in final demand for the grocery
store and this is the amount that should be applied to the final demand
multipliers for retail (NAICS 4A0000).
 Other dollar amounts can be included in the impact assessment if there is
good evidence these services/goods will be supplied locally.
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Results for Grocery Using Type II
Final-Demand Multipliers
1.8751
$5.29 million
x
final-demand
output multiplier
$9.92 million
=
total output
0.5511
$5.29 million
x
final-demand
earnings multiplier
$2.92 million
=
total earnings
19.3360
$5.29 million
x
final-demand
employment multiplier
102
=
total jobs
1.1995
$5.29 million
x
final-demand
value-added multiplier
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$6.35 million
=
total value-added
Thank You
Performance Economics LLC
617-501-9114
[email protected]
www.performanceeconomics.com
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