A blog from BEA Director Vipin Arora
In the alphabet soup of BEA acronyms, you’ve probably heard of GDP (gross domestic product). You might have heard of PCE (personal consumption expenditures, a fancy word for consumer spending). And you may have come across DPI (disposal personal income). But have you ever heard of RIMS II?
I hope so. Because our Regional Input-Output Modeling System (RIMS II) is a unique tool for conducting regional economic impact analysis. RIMS II can help investors, planners, elected officials, and others assess the potential economic impacts of various projects and programs on counties, metropolitan areas, states, or other regions.
We developed the original RIMS (regional industrial multiplier system) in the 1970s. The system was renamed RIMS II in the 1980s after significant improvements, including a user guide that clearly lays out the concepts and methods behind RIMS II and highlights key use cases for the multipliers that are the ultimate output of the model. Today, the model is updated and refined annually with new data. Users can define their region of interest (a county or an aggregation of contiguous counties).
The multipliers summarize the impacts of an initial change in economic activity due to a project or program. This initial change, referred to as a change in final demand, is a critical input for effective use of RIMS II multipliers. Examples of final demand changes include investment in new buildings, equipment, and software; government purchases; and purchases by households. Users provide detailed information on the initial change, and this change is applied to the multipliers. The results provide an estimate of the regional impact on output, value added, earnings, or employment that are associated with the project or program under study.
Like all economic impact models, RIMS II provides approximate figures that are best suited for estimating the impacts of small to medium changes on a regional economy. Yet even with these caveats—and some others spelled out in the user guide—RIMS II remains an essential tool for regional developers and planners.