What is the REDYN model?
The REDYN model is an easy-to-use, flexible, web-accessible, and technically rigorous economic model of the United States economy. The REDYN model calculates financial, budgetary and economic impacts at the national, regional and enterprise levels of scale as required. It reports year-by-year, dynamic, non-linear effects on industry, household, and government sectors resulting from virtually any activity that creates or modifies business transactions. The model utilizes annual updates from dozens of public and private sources to adjust baseline values and refine long-term economic forecasts; values are projected through 2055 in the latest dataset.
A comprehensive Social Accounting Matrix (SAM) defines all production and consumption functions in the model, and captures virtually all structural economic activity in the US. Input-Output (IO) functions of the model are derived from sector relationships revealed in the SAM, and those relationships provide a framework for defining equilibrium processes in the model's Computable General Equilibrium (CGE) functions. Relationships in the model not quantified by survey data are estimated through the rigorous application of modern econometric theory, and are calibrated to optimize their ability to replicate observed historical activity.
Major advances in the representation of the spatial economy, or New Economic Geography (NEG), are leveraged by the REDYN model, especially gravity theory (regional attraction) as it is used to estimate inter-regional trade flow (regional imports/exports). Inter-regional spatial relationships in the model are based largely on a transportation network database, produced by Oak Ridge National Laboratories, that defines impedance from each region to all other regions for road, rail, water, air, pipeline, and proxy modalities. This multi-modal transportation network data enables REDYN to capture and estimate unique trade relationships between each US country and every other US county simultaneously. In combination with the highly specific regional production and consumption data, these unique trade relationships allow REDYN to powerfully illuminate economic linkages and dependencies within the US economy at very high resolution. Greatly enhanced economic linkage and dependency data empowers REDYN with a capacity for predictive flexibility, sensitivity, and accuracy not available in any other economic modeling tool.
A breakthrough in design is the commodity production linkage between the trade flow process and an entity-based data structure for the economy (i.e. the Economic Entity Framework, or EEF). Entities are defined for all economic actors, including governments, firms, households, investors, etc. Commodities are the goods and services they use and produce, and include more than 500 tangible commodity types and more than 800 labor commodity types. In this framework, all economic actors perform one, and exactly one, function: they consume some menu of commodities, and through entity-, location-, and time-specific processes, transform that menu of commodities into an alternate menu of commodities. For example: firms consume intermediate inputs, capital, labor, etc and produce commodities for sale; households consume capital, final demand goods, government services, etc and produce labor; and so on for every type of economic actor.
The REDYN model is the most detailed commercially available economic model of the US economy: industry sectors are provided to 5-digit NAICS detail per the Quarterly Census of Employment and Wage from the Bureau of Labor Statistics (BLS) (coming soon: 6-digit detail), occupational sectors are provided to the maximum detail reported in the Occupational Employment Statistics from the BLS, demographics are provided for 2,400+ cohorts per data from the Bureau of the Census (coming soon: 4,200+ cohorts), geography is provided to the county level of detail (coming soon: ZIP-code detail), and time periods are provided to the annual level of detail (coming soon: monthly detail).
These features and more make REDYN more flexible, complete, and accessible than any other modeling approach to the U.S. economy. Fresh, efficient design and internet accessibility make REDYN ideal for supporting long-term collaborative efforts, as well as for conducting individual studies.