The impact of relocation of government activities: a CGE model for the city of Buenos Aires

1 de Agosto de 2015

Autor/es: CHISARI, OMAR OSVALDO / RAMOS, MARÍA PRISCILA /

Recent proposals of the Argentinean capital city relocation and the already begun relo-cation process of the local public offices from the North to the South of the city seem to be no neutral for the rest of local economy. Changes in relative prices of goods and factors as a consequence of these public administration decisions may affect households and activity sectors agglomeration and dispersions within the city or to the rest of the country. In order to evaluate and quantify the economic impact of those scenarios, we developed a multi-region and multi-sector CGE urban model calibrated for 2011. Results shows that while the relo-cation of the national government in the rest of the country negatively affect the local GGP and the tax collection, moving local public offices to the South of the city could improve the value-added of the city and particularly that of the Southern region. However, under any of the two scenarios, (poor) households (and also Services) agglomerate in the North of the city since the real estate price and location costs relatively fall. These results are robust to changes in model assumption (capital and labor mobility) and the value of key parameters (elasticities of substitution between inputs and factors in production functions).

Link: https://www.researchgate.net/publication/281558677_The_impact_of_relocation_of_government_activities_a_CGE_model_for_the_city_of_Buenos_Aires