I estimate a multiplier effect using the county average of the gross domestic product (GDP) in Mississippi and the average county subsidy award in 2016. In this case, a multiplier effect is a change in government subsidy spending inputs, which corresponds to a larger change in economic output. The multiplier is where represents output and is subsidy spending. The elasticity y g of output with respect to the subsidy is . The elasticity of output is a function of government spending, written as . I estimate that = .01. An elasticity is defined as . I use the following equation to plot a point estimate of a multiplier effect: The GDP of Mississippi in 2016 was $108.5 billion (BEA, 2016). Average county GDP is $1,323,170,731. The average observed county subsidy in 2016 was $375,734. I use the fourth forecast’s private employment subsidy coefficient for . I convert my results into logs for better interpretation. I estimate a estimate of 0.18 for my multiplier effect. While my calculations are simple, this estimate provides additional evidence to the results gathered in my previous analysis which suggest that any county benefits in employment correspond in a reduction of economic activity in other counties. Politicians will likely support any spending decisions as long as the estimated multiplier is positive because an increase in economic output can be determined. However, in addition to my previous results, the estimated multiplier is very small and any changes that appear on wages or employment are not statistically different from zero. Conclusion Mississippi has had difficulty adapting to industrialization in the post-bellum United States. Politicians seized upon the political climate of the early 20th century and began to
I estimate a multiplier effect using the county average of the gross domestic product (GDP) in Mississippi and the average county subsidy award in 2016. In this case, a multiplier effect is a change in government subsidy spending inputs, which corresponds to a larger change in economic output. The multiplier is where y represents output and g is subsidy spending. The elasticity of output with respect to the subsidy is . The elasticity of output is a function of government spending, written as . I estimate that = .01. An elasticity is defined as . I use the following equation to plot a point estimate of a multiplier effect: The GDP of Mississippi in 2016 was $108.5 billion (BEA, 2016). Average county GDP is $1,323,170,731. The average observed county subsidy in 2016 was $375,734. I use the fourth forecast’s private employment subsidy coefficient for . I convert my results into logs for better interpretation. I estimate a estimate of 0.18 for my multiplier effect. While my calculations are simple, this estimate provides additional evidence to the results gathered in my previous analysis which suggest that any county benefits in employment correspond in a reduction of economic activity in other counties. Politicians will likely support any spending decisions as long as the estimated multiplier is positive because an increase in economic output can be determined. However, in addition to my previous results, the estimated multiplier is very small and any changes that appear on wages or employment are not statistically different from zero. Conclusion Mississippi has had difficulty adapting to industrialization in the post-bellum United States. Politicians seized upon the political climate of the early 20th century and began to
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