PPD 599 Economic Models and Applications for Impact Analysis

PPD 599 Economic Models and Applications for Impact Analysis
Name
University of Southern California
Date
Impact analysis on oil market I-O model in Texas
Assess the economic impact of the oil industry in the economy of Texas, and the interdependencies in the regional economy. With oil and gas price being on long term low in the last three years, the effect of a slowdown in the oil and gas industry is reverberated across the region. Similarly, an improving market provides better opportunities for the oil and gas producers and affects consumer confidence in the region. Collecting information on all firms when creating the I-O table to forecast the future, then gathering data on the best practice firms that are technologically advanced should be prioritized (Rose & Miernyk (1989). The researchers further expanded on the application of the input-output analysis after Leontief. The I-O model highlights the impact of industry (ies) on the economy with emphasis on the economic indicators an implemented by evaluating changes in the economy after spending by the oil companies. Determining the direct, indirect and induced effect of the oil and gas industry would provide clues on interdependence of the other sectors and contribution of each to the GDP. The main direct effect is employment in the industry and this affects the income levels and revenue. The income and consumption multipliers are related through interdependencies linking the various economic sectors. This is an impact analysis on the effect of the oil and gas industry in Texas.
Model interactions
The I-O model is appropriate since it focuses on production, with emphasis on verifiable measurable quantities (Rose, 1995). The ability to analyze the economic impact and interactions means that it is possible to isolate the ripple effects of the different sectors. The direct impacts are associated with changes in industry output, income levels and employment, while this affects the firms and households as there are linkages of the various sectors and business activities. There are also indirect effects of the economic sectors or disruptive events.
Assumptions
The production of recoverable wells will decline when there are no new technologies itegarted
The technology utilized by the market players is similar
The value of the oil resources depends on the prevailing prices and proportion of resources held
Long term effects of the multiplier will persist
The oil and gas ...