ABSTRACT
Almost certainly, the most commonly used tool for local and regional policy analysis and advocacy in the United States is the economic impact study. It is also among the most controversial methods for analyzing policy, and possibly the least popular among economists. Economic impact refers to the net increase in local or regional income, jobs, earnings, or tax revenue produced by a particular institution or investment project. Economic impact is estimated through two general steps. An economic impact study begins by calculating the direct net increases in income and employment produced by an institution or development project, and then calculates the secondary increase in income produced by the local or regional multiplier effect of this added direct spending.
