The ChallengeEvery day, the government initiates federal policies and acquisition programs that impact numerous economic sectors and regions. From closing a military base to raising air quality standards, the challenge for policymakers is to accurately forecast the economic consequences of their decisions.
When the cost to implement a new policy or program can exceed tens of billions of dollars, government decision makers and other stakeholders need a powerful macro-economic modeling tool to help them understand the long-term impacts of their actions on national, regional, and local economies. Booz Allen Hamilton has deployed just such a tool: The Dynamic Macro-Economic Impact Model.
The firm applied its Dynamic Macro-Economic Impact Model when it was engaged to analyze the economic impacts of an initiative to improve air transportation capacity and efficiency on a major metropolitan region. The Booz Allen team also leveraged its deep understanding of the client mission and its economic and statistical expertise for the project.
The sophisticated model includes 169 industry sectors and almost 80 commodities, and can project economic impacts 20 years into the future. In one scenario, the team examined the impact of increased airport capacity on lodging, parking, food and beverage, and other industries. The analysis generated detailed metrics demonstrating that even a limited implementation would stimulate significant regional economic growth—just a 10% increase in passenger capacity would boost the average annual gross regional product by $6 billion and create 50,000 new jobs over two decades.
By quantifying expected benefits within specific sectors, leaders can undertake program implementation, plan for expected growth, and study the impact of alternative actions, such as eliminating programs. The model can also impact funding from lawmakers. With quantifiable results, officials can demonstrate to Congress and other stakeholders the potential economic benefits of their projects, even when those benefits may take years to realize.
Download a PDF version of the case study entitled, "Dynamic Macro-Economic Impact Modeling."
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