Metrics
Local Multiplier 3 (LM3)

The Money Trail ... Measuring your impact on the local economy using LM3 ... Application of the Local Multiplier

Burgess COMMENTARY

Peter Burgess

Application of the Local Multiplier Open The Money Trail (PDF)

The multiplier is an important concept in economics, but not talked about very much by the media and popular analysts of the economy. When funds flow around the economy there are many different transactions that take place, some of them are between local people and some of them are between local people and people outside the local area. How much is local and how much is non-local determines the health of the economy.

The Money Trail is a report prepared in the UK by The CountrySide Agency and the New Economics Foundation (NEF) in 2003 that describes in simple language how the local multiplier can be measured at a reasonable cost and used to help a community and the various decision making bodies improve the performance of the community.

The concept of the multiplier is used in Keynesian economic analysis at the macro level. This is doing something very similar at the local level.

The Local Multiplier (LM) describes the idea of local and multiplier. The 3 is added because the process of multiplier calculation is done through just three (3) cycles rather than all the cycles of money recirculation.