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Effects of an external shock on the economy of Bogota, Colombia

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  • Arguello, Ricardo
  • Cicowiez, Martin

Abstract

We analyze the impact of the fall in international oil prices on the economy of Bogota, Colombia´s capital city. After a relatively prolonged oil price and export boom, the Colombian economy is facing a rapid landing as oil prices have fallen dramatically in the last years. Even though Bogota does not export oil or hosts important oil service activities, it is clear that its economy will be shocked as national exports drop and the exchange rate appreciates, besides any input-output linkages between its economy and that of the rest of Colombia. We use a static bi-regional general equilibrium model for this purpose, featuring labor mobility between the regions, two levels of government, and public and private investment. Our results indicate that the economy of Bogotá will be negatively impacted and that the magnitude of the shock is of a similar size to that accruing to the rest of Colombia.

Suggested Citation

  • Arguello, Ricardo & Cicowiez, Martin, 2016. "Effects of an external shock on the economy of Bogota, Colombia," Conference papers 332781, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332781
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    References listed on IDEAS

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    1. Devarajan, Shantayanan & Robinson, Sherman, 2013. "Contribution of Computable General Equilibrium Modeling to Policy Formulation in Developing Countries," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 277-301, Elsevier.
    2. Lofgren, Hans & Robinson, Sheman, 2002. "Spatial-network, general-equilibrium model with a stylized application," Regional Science and Urban Economics, Elsevier, vol. 32(5), pages 651-671, September.
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