The open-economy multiplier and the imports induced by $100 of new spending, at your MPC and tax rate.
MPM
Multiplier
Extra income from $100
Imports induced
0.000
2.778
$277.78
$0.00
0.050
2.439
$243.90
$12.20
0.100
2.174
$217.39
$21.74
0.150
1.961
$196.08
$29.41
◀ yours
0.200
1.786
$178.57
$35.71
0.300
1.515
$151.52
$45.45
Calculated in your browser — the numbers you enter are never sent to our servers.
What it calculates: Marginal propensity to import (MPM), Average propensity to import, Income elasticity of imports, Multiplier without imports.
Updated 22 September 2026 · Transparent assumptions
Imports up 150 on 1,000 of extra income: an MPM of 0.15
The marginal propensity to import is the share of an extra dollar of income that is spent on goods and services from abroad. It is a ratio of changes: the change in imports divided by the change in income. When income rises from 20,000 to 21,000 and imports from 2,800 to 2,950 ($ billions), the MPM is 150 ÷ 1,000 = 0.15.
MPM = ΔM ÷ ΔY
It sits alongside the marginal propensities to consume and save: of each extra dollar, some is spent at home, some abroad, some saved and some taken in tax.
Worked example
ΔM = 2,950 − 2,800 = 150
ΔY = 21,000 − 20,000 = 1,000
MPM = 150 ÷ 1,000
MPM = 0.15
An MPM of 0.15 against an average import share of 0.14 is an income elasticity of 1.07
The average propensity to import is simply imports over income: 2,800 ÷ 20,000 = 0.14 before the rise. Dividing the marginal share by the average share gives the income elasticity of demand for imports — how many percent imports rise for each 1% rise in income. Here 0.15 ÷ 0.14 = 1.07, so imports grow slightly faster than income.
income elasticity = MPM ÷ APM
Estimated income elasticities for imports are often above 1, which is one reason trade has grown faster than output over the long run, and why fast-growing economies tend to see their trade balances deteriorate.
Elasticity
APM = 2,800 ÷ 20,000 = 0.14
e = 0.15 ÷ 0.14
e = 1.07
With an MPC of 0.8 and a 20% tax, imports cut the multiplier from 2.78 to 1.96
Spending on imports leaves the domestic circular flow, so it works like saving or tax: each round of spending is smaller. With a proportional tax t, households spend MPC × (1 − t) of each extra dollar of income, and the MPM of it is spent abroad. The multiplier becomes 1 ÷ (1 − MPC(1 − t) + MPM). With MPC 0.8 and t = 20%, that is 1 ÷ 0.36 = 2.78 without imports and 1 ÷ 0.51 = 1.96 with an MPM of 0.15.
k = 1 ÷ (1 − MPC(1 − t) + MPM)
Of $100 of new government spending, the open economy produces $196 of extra income, and 0.15 × 196 = $29 of it is spent on imports — demand that raises output abroad rather than at home.
Two multipliers
closed: 1 ÷ (1 − 0.8 × 0.8) = 2.778
open: 1 ÷ (1 − 0.64 + 0.15) = 1.961
(imports induced: 0.15 × 196 = $29)
Ireland imports 102% of its GDP, the United States 14%: their multipliers differ accordingly
How much a country imports shapes how far domestic stimulus stays at home. On World Bank figures for 2024, imports of goods and services were 14.0% of GDP in the United States, 17.5% in China, 23.9% in India, 37.7% in Germany, 79.7% in Belgium, 102.2% in Ireland and 138.6% in Singapore — shares above 100% are possible because imported parts are re-exported.
In a highly open economy a large part of any stimulus leaks abroad, so fiscal policy is weaker at home and stronger for its neighbours. Coordinated stimulus among trading partners, as the G20 attempted in 2009, recaptures some of that leakage.
Because imports rise with income, booms widen trade deficits and recessions narrow them
A positive MPM ties the trade balance to the business cycle. When domestic income grows faster than foreign income, imports grow faster than exports and the trade balance worsens; in a recession imports fall back and the deficit narrows, as the US deficit did in 2009.
That cyclical swing is also an automatic stabiliser: part of a demand shock is exported to trading partners through imports rather than absorbed entirely at home.
In the fuller multiplier, induced investment adds to the denominator’s spending share and imports subtract
Some courses extend the multiplier with income-induced investment (MPI) and government spending (MPG) as well. Every propensity that re-spends income at home — consumption after tax, induced investment, induced government spending — enters with a minus sign inside the denominator, and every leak — imports — with a plus: k = 1 ÷ (1 − MPC(1 − t) − MPI − MPG + MPM).
k = 1 ÷ (1 − MPC(1 − t) − MPI − MPG + MPM)
If the re-spent shares add up to more than the leaks, the denominator falls to zero or below and no finite multiplier exists; the model then says spending would spiral without limit, which means the assumptions have failed rather than that the economy would explode. The calculator flags that case instead of printing a number.
Frequently Asked Questions
How do you calculate the marginal propensity to import?
Divide the change in imports by the change in income: MPM = ΔM ÷ ΔY. If income rises by 1,000 and imports by 150, the MPM is 0.15.
How does the MPM affect the multiplier?
Imports are a leakage, so a higher MPM lowers the multiplier. With a proportional tax the multiplier is 1 ÷ (1 − MPC(1 − t) + MPM).
What is the difference between the MPM and the average propensity to import?
The average propensity is total imports over total income. The MPM is the share of extra income spent on imports. Their ratio is the income elasticity of imports.
Why do small open economies have small multipliers?
Because a large share of any extra spending goes on imports, which raises output abroad rather than at home. The more a country imports at the margin, the more a stimulus leaks away.
Sources & References
Figures on this page are checked against primary, authoritative sources. Links open in a new tab.
Results are estimates for planning and analysis based on the figures you enter. They are not accounting, tax, or financial advice — verify with your own records and a qualified professional before making decisions.
Sudha, J. (2026, September 22). Marginal Propensity to Import Calculator. Calculator Matters. https://calculatormatters.com/economics/marginal-propensity-to-import-calculator/