Statistical presentation

Data description

Input-output multipliers are a measurement of the economy's response to changes in final use (consumption, investment and exports). The answer can be calculated in the form of changes in the national accounts' most detailed industry level in different variables, e.g. production, employment, income, imports, energy consumption, CO2 emissions or others. One of the most used multipliers indicates, for example, how many employed persons are required if 1 million DKK on investments in housing construction is needed. The multipliers contain both the direct effects in the industry which must initially meet a demand and the indirect effects in the industries that are formerly part of the chain of production processes needed before a product is ready for its final use.

The tables are divided into 3 categories, 1. Production multipliers, 2. Employment multipliers and 3. Input multipliers. Each of these is divided further into two types of multipliers 1 and 2, where the 1-tables e.g. PRODMUL1 are characterized by the fact that here the initial change in demand occurs in an industry, while in the 2-tables e.g. PRODMUL2, the initial shock come from one of the components of the demand, such as housing construction or export. It gives a total of 6 different tables. For each of the 6 tables it is possible to specify further, for example, what type of multiplier you are interested in and for the employment multipliers the type of employment you are interested in, including the number of employees, the number of wage earners, the number of full-time employees or the number of full-time employed wage earners .

For the production multipliers PRODMUL1 and PRODMUL2 you can choose between 3 different multiplier types, while for the other four multiplier tables you can choose between 5 different types. What lies behind the 5 types is outlined here:

** Direct effect ** For tables of the type "... MUL1", the direct effect on production in the sector considered is assumed to be equal to 1 (mill. DKK). This means that the production here in isolation will increase by one mill. In the tables BESKMUL1 and INPMUL1, the direct effect is the quantity of imports, employment etc. the industry requires in order to increase production by 1 mill DKK. If the direct import multiplier is 0.31, this means that imports will increase by DKK 310,000 if the industry in question has to produce for an additional DKK 1 million.

For "..MUL2" type tables, the direct effect is related to components of the final use. That is, how much extra production, employment, import, etc. this gives rise to directly, in e.g., exports or household consumption of meat directly in the industries that must initially supply this demand.

** Simple multiplier. ** This is the traditional multiplier that also includes the directs as well as the indirect indirect effects. That is, when a specific industry has to produce 1 mill. it has a large number of subcontractors who also have to produce extra, and the subcontractors even have subcontractors, etc. The initial shock to the demand of a single industry is spreading like rings in the water.

** Total multiplier ** This multiplier covers the so-called induced effects. The modeling goes a step further here. Now it is assumed that the wages paid to the new extra employees are spent within the same period on private consumption, which, in turn, will give rise to even more extra Danish production, extra imports, extra employment and so on. This means that the total multiplier is always higher than the simple one. It should be noted, however, that a reduced (truncated) version of the total multiplier is used, which is not so much larger than the simple multiplier. However, caution should be exercised in using this multiplier rather than the simple one. This is due to the implicit assumption that the "new" employees had no employment or consumption earlier, which would often be wrong. If you change from another job or social transfers, you have probably had some consumption in advance.

** Type I multiplier. ** This is a "normalized" version of "Simple multiplier". This is the simple multiplier divided by the direct effect. The interpretation of the Type I multiplier is what is the total employment in all industries if the size of the investment results in a direct employment effect of exactly one new employee. This multiplier is applicable in situations where it is known that a project will give rise to e.g. 200 new employees, and the question is, how many new employees such an investment will generate throughout the economy.

** 5th Type II multiplier. ** This is a "normalized" version of "Total multiplier". The same description as in the Type I multiplier applies here. Compiled as the Total multiplier divided by the direct effect.

Thus, the tables contain a number of different multipliers, which can be considered a tool for assessing the impact of various "shocks" on demand. The multipliers can be used when it is estimated that a change in demand in the economy will result in, for example, larger production in Danish slaughterhouses or larger housing investments. For example, if it is to be assessed how many employees an investment in housing construction will give rise to, an appropriate employment multiplier just should be multiplied with the size of the expected investment. The simple multiplier is in this case 1,133. If there is to be invested 2 billion DKK in housing construction, this figure is multiplied by the multiplier 1,133 * 2000 = 2,266 employees.

For a more in-depth description of how the tables and multipliers are used and how results are interpreted, please see the document xxxxxxx

Classification system

Input-output tables which are the foundation for the multiplier tables are developed as an integrated part of the national accounts, and are therefore based on the same classifications and groupings as here. Danish Industry Code 2007 (DB07), a Danish version of the international nomenclatures EU NACE Rev. 2 and UN ISIC, Rev. 4, contains a number of default groupings: 127, 36, 19, and 10 groupings. The final national accounts 117 industry group corresponds - with few deviations - to the 127 standard grouping and the 117 industries of the national accounts can be aggregated to the other standard groups. National accounts can thus be compared and used in conjunction with other statistics using the DB07 standard groups.

Household consumption as well as the individual part of public consumption are found in the input-output tables broken down by the COICOP classification, while the collective share of public consumption is split according to the COFOG classification. However, comparisons with other statistics at a detailed level of industries will often show deviations, partly due to variable definition differences, partly as a result of the national accounts desire for calendar year delimitation and its requirements for overall coverage of economic activity.

Internationally, there is a high degree of comparability with other countries' national accounts, as the Danish national accounts are prepared in accordance with the ENS2010 guidelines

Sector coverage

The multipliers are organized on the basis of the industrial classification of the national accounts and input-output tables. Sectors in the national accounting sense, including the household sector or the financial sector, run across national accounts industries. No specific multipliers have been calculated for the national accounts sectors. Danish Industry Code 2007 (DB07), a Danish version of the international nomenclatures EU NACE Rev. 2 and UN ISIC, Rev. 4, contains a number of default groupings: 127, 36, 19, and 10 industry classifications. These groups are customized in the national accounts, so it is groupings of industries 117, 69, 38, 21 and 13. This includes the transport sector or the food sector, both of which can be formed by aggregating certain industries.

Statistical concepts and definitions

Input-output tables:

Multiplier: The multipliers express, in terms of changes in production, imports, income or employment, the magnitude of the response in the economy by industry to a 1 million DKK shock to final use in a specific industry or final use category. Because multipliers are calculated as a kind of unit value, in practice they are merely factors which, when multiplied by actual or potential changes in the final use, provide the effect on employment, production or import.

Statistical unit

The legal units in the industries of the national accounts are the local kind of activity unit. The is the smallest unit that a production account can be compiled for.

Statistical population

All units engaged in Danish economic activity.

Reference area

Denmark

Time coverage

Initially, multiplier tables are published only for the most recent year of final national accounts with full detail in the industry dimension. It is assessed that the primary application of the multipliers will be as a tool to measure in broad terms the effect of possible changes in final use in the current year. For that purpose only the most up-to-date multiplier available is required and not a series of multipliers.

The structural part of multipliers change rather slowly over time so in that respect there is generally no serious problem in using a multiplier which is a few years old. However, it is advisable to inflate the latest available multiplier to the current year. Otherwise, there will be a risk of overvaluing the effects slightly.

Naturally, analyzing time series of multipliers in chained values is an independent purpose in itself. It gives an impression of the size of structural changes in e.g. the amount of employment necessary for satisfying one unit of final demand. It can be seen as an alternative measure of productivity that may be useful to study in a time perspective. Especially multipliers which combine variables in monetary terms with variables in physical terms e.g. the employment multiplier, will be influenced by price changes over time. Therefore, if time series are required they need to be in chained values.

Base period

Initially, the multipliers are published only for the most recent year of final national accounts and input-output tables.

Unit of measure

All multipliers are calculated as effects in DKK millions or number of employees of a 1 DKK million shock to final use.

Reference period

The multiplier tables refer to a calendar year. All effects of the shocks to final demand are expected to take place within the year considered.

Frequency of dissemination

Annual statistics.

Legal acts and other agreements

Data are used in these tables, which are already published in other tables, and therefore no special data was collected for these statistics. The data used is based on the following legislation.

Lov om Danmarks Statistik §§ 6 og 8 - 12. Europa-Parlamentets og Rådets forordning (EU) Nr. 549/2013 af 21.maj 2013 om det europæiske national- og regionalregnskabssystem i Den Europæiske Union (ESA2010) (EUT L 174 26.06.2013, s. 1). Europa-Parlamentets og Rådets forordning nr. 691/2011 om europæiske miljøøkonomiske regnskaber.

Cost and burden

The statistics are based on information from existing statistical sources. Therefore, there is no direct reporting burden in the compilation of these statistics Input-output tables are derived from the final national accounts.

Comment

Further information about this statistics can be obtained from Statistics Denmark.