Chile: Building a computable general equilibrium model with an application to the Bío Bío region

This paper describes the building of a regional computable general equilibrium model applicable to the analysis of development policies and major economic shocks for specific regions of Chile. Then is generated an application for the Bío Bío region which reveals that the effects of the current fisheries crisis (caused by the scarcity of jack mackerel) can be expected to result in the production structure becoming further specialized in the wood and cellulose industries. It also finds that sectors with few production linkages to the fisheries sector are strongly affected through indirect channels that would be hard to identify without a general equilibrium approach.