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model based on the local dollar flow among 533 The economic impact figures for Arts&Economic finely detailed industries within the unique Prosperity 5 were computed using what is called an economy of Indian River County. This was "iterative"procedure. This process uses the sum of a accomplished by using detailed data on power series to approximate the solution to the employment, incomes,and government revenues economic model. This is what the process looks like provided by the U.S. Department of Commerce in matrix algebra: (County Business Patterns,the Regional Economic Information System,and the Survey of State and T= IX+AX+A2X+A3X+ ...+A"X. Local Finance), local tax data(sales taxes,property taxes,and miscellaneous local option taxes), as well T is the solution, a column vector of changes in each as the survey data from the responding nonprofit industry's outputs caused by the changes represented arts and cultural organizations and their audiences. in the column vector X. A is the 33 by 33 direct- requirements matrix. This equation is used to trace The Input-Output Process the direct expenditures attributable to nonprofit arts The input-output model is based on a table of 533 organizations and their audiences. A multiplier effect finely detailed industries showing local sales and table is produced that displays the results of this purchases. The local and state economy of each equation. The total column is T. The initial community is researched so the table can be expenditure to be traced is IX(I is the identity matrix, customized for each community. The basic which is operationally equivalent to the number 1 in purchase patterns for local industries are derived ordinary algebra). Round 1 is AX,the result of from a similar table for the U.S.economy for 2012 multiplying the matrix A by the vector X(the outputs (the latest detailed data available from the U.S. required of each supplier to produce the goods and Department of Commerce). The table is first services purchased in the initial change under study). reduced to reflect the.unique size and industry mix Round 2 is A2X,which is the result of multiplying of the local economy,based on data from County the matrix A by Round I (it answers the same Business Patterns and the Regional Economic question applied to Round 1: "What are the outputs Information System of the U.S. Department of required of each supplier to produce the goods and Commerce. It is then adjusted so that only services purchased in Round I of this chain of transactions with local businesses are recorded in events?"). Each of columns 1 through 12 in the the inter-industry part of the table. This technique multiplier effects table represents one of the elements compares supply and demand and estimates the in the continuing but diminishing chain of additional imports or exports required to make total expenditures on the right side of the equation. Their supply equal total demand. The resulting table sum, T,represents the total production required in the shows the detailed sales and purchase patterns of local economy in response to arts activities. the local industries. The 533-industry table is then aggregated to reflect the general activities of 32 Calculation of the total impact of the nonprofit arts industries plus local households,creating a total of on the outputs of other industries(T)can now be 33 industries. To trace changes in the economy, converted to impacts on the final incomes to residents each column is converted to show the direct by multiplying the outputs produced by the ratios of requirements per dollar of gross output for each household income to output and employment to sector.This direct-requirements table represents the output. Thus,the employment impact of changes in "recipe" for producing the output of each industry. outputs due to arts expenditures is calculated by multiplying elements in the column of total outputs 22 AMERICANS FOR THE ARTS I Arts&Economic Prosperity 5