Economic analysis can be defined as being the act of using and applying economic reasoning and techniques to help business owners and key personnel implement strategic decisions to help them improve the overall performance of their business or organisation.
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When undertaking economic analysis our economist will follow a sequence of interrelated steps.
- Document, analyse, research and interpret data.
- Recognise and analyse data trends and patterns and their implications.
- Offer sound advice and analytical principles, based on trends and patterns.
- Identify, define and track key variables.
- Undertake a cost-benefit analysis to enable you to determine whether economic benefits exceed economic costs.
- Provide economic forecasting and suggestions.
- Assess short to medium-term determinants; and
- Perform an Economic SWOT analysis.
Economists have a variety of economic analysis methods at their disposal. For example, they may use any of the following methods:
Fiscal Impact Analysis
Interestingly, the cost-benefit analysis (CBA) is the most comprehensive economic analysis method however it is also the most time-consuming method to perform.
The use of the cost-benefit analysis (CBA) method will provide a bottom-line summary of the net benefit of performing the economic analysis, and this method will enable the benefits and costs to be readily identified and compared. For example, economists can: