Economic Impact Analysis
Organizations use economic impact analysis to determine direct and indirect effects of businesses within a market or an economy, and how changes in public policy and investments affect the local, state or national economy. For markets, impacts include changes in supply and demand fundamentals — production and prices — and capacity additions or retirements. For the broader economy, impacts include job creation or losses, and changes in GDP, household income, taxation and demographics. The senior practitioners at FTI Consulting draw upon their deep expertise and experience to apply market and macroeconomic models across industries and geographic sectors to meet global clients’ needs.
How We Help
Industry, trade and professional associations, and governments frequently engage us to apply economic analysis to formulate strategic plans and evaluate the best course of action. Also, we educate key stakeholders — policymakers, regulators, the media, and the public — on the economic benefits and costs of their plans.
One of the guiding principles of our economic impact analysis is to be transparent and avoid using "black...
One of the guiding principles of our economic impact analysis is to be transparent and avoid using "black box" models. In other words, we apply proprietary and third-party, peer-reviewed models and continually update them with the most recent data from proprietary and public sources. Our customized models often utilize these same models and/or sources.
To provide clients with the insights into the economic and environmental dimensions of projects and policies, we frequently integrate the following modeling methodologies and third-party tools:
- Simulation modeling: Microsimulation allows stakeholders to more accurately forecast future or complex situations in dynamic environments when extrapolation or regression analysis is insufficient to capture the true effects of alternative strategies, or to fine-tune programs before rolling them out.
- Discrete choice modeling: This methodology uses data on the current population, including individual characteristics, characteristics of discrete alternatives and choices individuals make today, to predict how individuals will act when their options change due to policy or regulatory changes.
- IMPLAN: An input-output (IO) model that determines the direct, indirect, and induced effects of spending or consumer expenditures on a regional economy
- REMI PI+: A computable general equilibrium (CGE) model that determines the long-term economic and demographic effects of policy at the regional and national levels
- PLEXOS: a simulation model of the North American natural gas and electricity markets, including their interactions, prices, capacity, and generation
- Enelytix: A nodal, hourly model of wholesale electricity markets, which forecasts electricity dispatch, plant revenues and costs, generation, and LMPs, including negative pricing
- CARAT: The Carbon and Regional Analysis Tool, developed by our firm, assesses the GHG footprint of an industry, nationally or regionally, including its supply chain and labor inputs
- CTAM: Derived from the Annual Energy Outlook (AEO), CTAM forecasts GHG emissions at a regional level and assesses the fiscal and cost effects of carbon pricing
- GTAP: Commodity and sectoral CGE model of production, consumption, and international trade and financial transactions used to examine trade policy
Carbon markets and pricing.
Carbon markets and pricing. Clients benefit from our extensive experience in modeling carbon pricing (such as the AB32 cap-and-trade in California and carbon taxes across several other jurisdictions) and their impacts on economies, specific industries, government budgets, and regional and national environmental quality.
Demographics. Economic research often involves demographic trends. Our experts are adept at integrating economic analysis with demographic and socioeconomic data, such as examining the interactions between labor markets and quality of life metrics for older workers and the different impacts of the COVID-19 pandemic on different populations.
International trade. Using the GTAP model, our experts have assessed the economic impacts of trade policies, including the tariffs on steel and aluminum between the U.S. and its trading partners. Results include impacts to GDP and for specific commodities for specific industries.
Environmental regulations. Clients rely on our experts to demonstrate the impact of changing regulations for the energy industry, the manufacturing sector, and the general economy. In addition, we have assessed the impact of criteria air pollutants as well as biofuel policy.
Federal and state fiscal policy. We determine the overall economic impact of budget shocks and the impacts to specific industries. Our consultants apply both REMI PI+ and IMPLAN to model the impacts of major fiscal issues such as the “fiscal cliff” and federal “sequestration.”
Greenhouse gas (GHG) footprints. With our CARAT tool, we have the most up to date and detailed (in terms of industry and regional granularity) model for GHG footprints and contributions available.
Labor economics. We help clients understand the economic effects of changes in employment, GDP, personal income, tax revenues, and deployment of economic development incentives in their regions of operation.