The Macroeconomic Activity Module (MAM) links NEMS to the rest of the economy by providing projections of economic driver variables for use by the supply, demand, and conversion modules of NEMS. The derivation of the baseline macroeconomic projection lays a foundation for the determination of the energy demand and supply forecast. MAM is used to present alternative macroeconomic growth cases to provide a range of uncertainty about the growth potential for the economy and its likely consequences for the energy system. MAM is also able to address the macroeconomic impacts associated with changing energy market conditions, such as alternative world oil price assumptions. Outside of the AEO setting, MAM represents a system of linked modules which can assess the potential impacts on the economy of changes in energy events or policy proposals.  These economic impacts then feed back into NEMS for an integrated solution. MAM consists of five submodules: 

• Global Insight Model of the U.S. Economy  
• Global Insight Industry Model 
• Global Insight Employment Model 
• EIA Regional Model 
• EIA Commercial Floorspace Model

The IHS Global Insight Model of the U.S. Economy (Macroeconomic Model) is the same model used by IHS Global Insight, Inc.  to generate the economic projections behind the company’s monthly assessment of the U.S. economy. The Industry and Employment submodules, are derivatives of  IHS Global Insight’s Industry and Employment Models, and have been tailored to provide the industry and regional detail required by NEMS. The Regional and Commercial Floorspace Submodules were developed by EIA to complement the  set of Global Insight models, providing a fully integrated approach to projecting economic activity at the national, industry and regional levels. The set of models is designed to run in a recursive manner (see Figure 3). Global Insight’s Macroeconomic Model determines the national economy’s growth path and final demand mix. The Global Insight Macroeconomic Model provides projections of over 1300 concepts spanning final demands, aggregate  supply,  prices,  incomes,  international trade, industrial detail, interest rates and financial flows. 

The Industry Submodule takes the final demand projections from the Macroeconomic Submodule as inputs to provide projections of output and other key indicators for 61 sectors, covering the entire economy. This is later aggregated to 41 sectors to provide information to NEMS. The Industry Submodule insures that  supply by industry is consistent with the final demands (consumption, investment, government spending, exports and imports) generated in the Macroeconomic Submodule. 

The Employment Submodule takes the industry output projections from the Industry Submodule and  national wage rates, productivity trends and average work-week trends from the Macroeconomic Submodule to project employment for the 41 NEMS industries.  The sum of non-agricultural employment is constrained to sum to the national total projected by the Macroeconomic Submodule. 

The Regional Submodule determines the level of industry output and employment, population, incomes, and housing activity in each of nine Census regions. The Commercial Floorspace Submodule calculates regional floorspace for 13 types of building use by Census Division. 

Integrated forecasts of NEMS center around estimating the state of the energy-economy system under a set of alternative energy conditions. Typically, the projections fall into the following four types of integrated NEMS simulations: 

• Baseline Projection 
• Alternative World Oil Prices 
• Proposed Energy Fees or Emissions Permits 
• Proposed Changes in Combined Average Fuel Economy (CAFE) Standards 

In these integrated NEMS simulations, projection period baseline values for over 240 macroeconomic and demographic variables from MAM are passed to NEMS which solves for demand, supply and prices of energy for the projection period.  These energy prices and quantities are passed back to MAM and solved in the Macroeconomic, Industry, Employment, Regional, and Commercial Floorspace Submodules in the EViews environment.¹¹