Macroeconomics
Open Economy Multiplier Calculator
Estimate the spending multiplier when taxes and imports create additional leakages.
Inputs and results stay in this browser. Currency symbols are illustrative; use any consistent currency.
Problem → model → reason → result
What problem does this model solve?
Estimate the spending multiplier when taxes and imports create additional leakages.
Why does the model apply?
Taxes and imports reduce successive rounds of domestic spending, making the open-economy multiplier smaller than the simplest closed-economy multiplier.
What assumptions does it make?
The variables must describe the same market, firm, period or decision context and use consistent units. Any behavioural condition implied by the formula—such as other factors remaining unchanged—must be reasonable for the question being asked.
Formula
Multiplier = 1 ÷ [1 − MPC × (1 − tax rate) + marginal propensity to import]
Calculation and working
The calculator substitutes your inputs locally and displays the numerical result. Change one input at a time to test which relationship drives the result.
What does the result mean?
Interpret the result in the economic context named above, including its sign, magnitude, units and time period. A calculated relationship is not by itself evidence that one variable caused another.
When does this model not apply?
Do not use the result when the input definitions, units or formula assumptions do not match the real situation. This is an educational model, not financial, investment, tax or policy advice; verify material decisions against primary data and professional guidance.
Clear answers
Frequently asked questions
What does the Open-economy multiplier do?
Estimate the spending multiplier when taxes and imports create additional leakages.
How does the Open-economy multiplier work?
The calculator applies this formula: Multiplier = 1 ÷ [1 − MPC × (1 − tax rate) + marginal propensity to import]. Taxes and imports reduce successive rounds of domestic spending, making the open-economy multiplier smaller than the simplest closed-economy multiplier.
What can I learn from the Open-economy multiplier?
It helps you explore the relationship described by this tool: Estimate the spending multiplier when taxes and imports create additional leakages. Change one input at a time to observe how it affects the result.
Does MW SysArc receive or store what I enter?
No. The calculation runs locally in your browser. MW SysArc does not receive or store your calculation inputs.
How should I use the result?
Use the result as an estimate or educational aid. Check important financial, business or policy decisions with qualified sources and current data.
Last reviewed 2026-07-14. Calculations tested 2026-07-14.