Net Multipliers Avoid Exaggerating Impacts: With A Bi–Regional Illustration for the Dutch Transportation Sector

Abstract

Industries often promote their interests by arguing that they have a big impact on the rest of the economy. This poses the question of how to measure the importance of an activity. To answer this, the literature often uses (regional) input–output analysis. This paper critically reviews the traditional use of multipliers in such cases. To avoid double–counting impacts and to solve related conceptual problems, the net multiplier concept is introduced. This net multiplier is illustrated empirically for the Dutch transport sector using a Type II biregional input–output model for the Netherlands.