A PRACTICAL NOTE ON THE NEOCLASSICAL ECONOMIC-BASE MARGINAL MULTIPLIER*

Computation and usage of my neoclassical economic-base marginal multiplier formula (Merrifield, 1987) is simplified. The note points out the economic parameters that must be estimated with some care and for which rough approximations suffice. It also indicates when the size of the multiplier will be significantly affected by the source of the exogenous stimulus (factor- or output-price change). The traditional bifurcation effort must be supplemented with careful estimates of only a small subset of the other parameters. For most of the simulated parameter combinations, the multiplier based on exogenous factor-price changes differed from the multiplier based on output-price changes by less than 10 percent.