Our methods and models

From research to development

At EEFA, we undertake pioneering work with our research. This stems not only from leveraging existing approaches but also from developing and refining our own models and methods, which we then apply to our projects. This innovative approach enhances both our analysis and the evaluation and processing of data.

The Input-Output Model

Input-output analyses serve as a robust tool for depicting dependencies within individual sectors and the interconnections across different levels of the economic system.

Developed by Wassily Leontief in the 1930s, input-output analyses rely on empirical input-output tables. These tables, segmented by economic sectors, outline the cyclical relationships among final demand, intermediate input linkages, and sectoral productionvalues in matrix form.

Within this framework, we distinguish between direct, indirect, and income-induced effects

We utilize such an input-output model to evaluate macroeconomic impacts stemming from the value added by economic sectors. This approach allows us to comprehensively assess direct, indirect, and income-induced effects, providing insights crucial for informed policy-making and strategic planning.

Direct effects: These encompass primary impacts on production, employment, and income generated within the sector under scrutiny. This includes sectoral value added, production output, direct intermediate inputs, as well as jobs and employee incomes.

Indirect effects: These arise from the production demands of intermediate goods, which in turn necessitate further production. This chain reaction continues indefinitely, albeit   diminishing with each stage, ultimately approaching zero. Consequently, every demand for intermediate and capital goods triggers downstream indirect effects that must be accounted for in analyses.

Income-induced effects: Stemming from employees' spending of their incomes, these effects drive overall economic production and employment. This increased demand for goods and services induces further income generation, perpetuating the cycle of economic activity.

Research in energy, resource, and climate economics must be both theoretically sound and application-oriented, and this is our commitment.

We advise public and private institutions using the latest economic methods. Our detailed sectoral and macroeconomic models examine relevant issues from national, European, and global perspectives.

Copyright 2024. Energy Environment Forecast Analysis (EEFA)
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