UECE - Unidade de Estudos sobre a Complexidade na Economia / UECE - Research Unit on Complexity and Economics
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- Characterizing self-organization and coevolution by ergodic invariantsPublication . Mendes, Rui VilelaIn addition to the emergent complexity of patterns that appears when many agents come in interaction, it is also useful to characterize the dynamical processes that lead to their self-organization. A set of ergodic invariants is identified for this purpose, which is computed in several examples, namely a Bernoulli network with either global or nearest-neighbor coupling, a generalized Bak-Sneppen model and a continuous minority model.
- Complex systems and thinking on multiple scalesPublication . Bar-Yam, YanneerThe study of complex systems can be viewed generally as an effort to understand the relationships between properties of systems when viewed on different scales. Viewing a system on different scales involves distinguishing details of behavior and understanding how the details give rise to collective behaviors that can be seen on a larger scale even through most of the details are no longer distinguishable. In this talk/paper I provide a brief review of various forms of interactions/relationships between parts of a system that illustrate how collective behaviors can arise. Finally, I discuss the complexity profile which is designed to capture the essential idea of considering a system on multiple scales.
- A theory of international conflict management and sanctioningPublication . Garoupa, Nuno R.; Gata, João E.In this paper we analyze sanctioning policies in international law. We develop a model of international military conflict where the conflicting countries can be a target of international sanctions. These sanctions constitute an equilibrium outcome of an international political market for sanctions, where different countries trade political influence. We show that the level of sanctions in equilibrium is strictly positive but limited, in the sense that higher sanctions would exacerbate the military conflict, not reduce it. We then propose an alternative interpretation to the perceived lack of effectiveness of international sanctions, by showing that the problem might not be one of undersanctioning but of oversanctioning.
- Testing for asymmetry in the inflation-unemployment trade-off: some evidence for the USAPublication . St. Aubyn, MiguelTwo sources of asymmetry in the Phillips curve are considered: the "capacity constraint hypothesis" and downward rigidity on wages and/or prices. The short run trade-off between inflation changes and the unemployment gap is modeled in a state-space framework that allows for time variation in both the NAIRU and the trade-off parameter. Empirical evidence for the US using the Kalman filter favors convexity of the Phillips curve, the trade¬off depending positively on the unemployment gap and on inflation changes. The two sources of asymmetry produce almost equivalent observational models, so it is not possible to distinguish one from the other.
- Location of foreign direct investment in a regional integration areaPublication . Pontes, José PedroIn a regional integration area two processes take place simultaneously: the fall of trade costs and the regional convergence of per capita of the countries. The impact of these trends upon the location of the productive activity is examined through a static two person noncooperative game where each player(firm)selects one of three spatial strategies: to locate a single plant in the large country; to locate a single plant in the small country; and to settle a multiplant firm in the two countries. It can be inferred that to locate a plant in the small country is always a dominated strategy. The degree of symmetry in market size in the two countries appears as the major factor of the feasibility of production in the small peripheral economy.On the other hand, the fall of trade costs has a sensible impact upon the location of production only for intermediate levels of regional convergence. The "tariff jumping" argument for FDI has a limited field of application.
- War and peace: the european decolonization processPublication . Garoupa, Nuno R.; Gata, João E.Current historiography on the European decolonization processes has developed no general theory of these processes, but is rather a collection of case-based studies. Moreover, there is no consideration for counter-factual possibilities, including the analysis of those cases where independence has not occurred. In this paper we aim at constructing a rational theory approach to decolonization that can encompass the majority of historical cases. Our rational theory is constructed by considering the possible convergence, or divergence, of interests between central and local administrations, and the weight that each carries in the decolonization decision-making process. Our theory predicts that a high value colony will be more likely to experience a colonial war, whereas a low value colony is more likely to achieve independence in a peaceful manner. This observation has to be refined once we allow for the existence of a domestic game between hawks (pro-colonialism} and doves (pro-independence). We then study the strategic relations between the two players, native political organizations and the colonial power, and the domestic outcome.
- Location of the productive activity in Portugal and Spain : a research notePublication . Pontes, José PedroTrade and direct investment flows between the two 1berian countries have risen dramatically after the adhesion of both countries to the European Community in 1986 so that Spain is currently the main economic partner of Portugal. However the relation between the two countries is asymmetrical. The trade deficit of Portugal towards Spain is very high and Spain remains a most preferred location for the productive activity o fmultinational firms. This asymmetry can be assigned to the core-periphery nature of the relation between the two countries, because Spain is a larger market, it is more developed and is nearer than Portugal to the core of the European market. However this is not the unique explanation because Portugal is also peripheral with relation to the other members of the European Union (with the exception of Greece) and the trade disadvantage is much smaller with them. The explanation seems to follow from the combination of two factors. First, the comparative advantages of Portugal with relation to Spain seem modest in comparison to the advantages that it enjoys with other members of the EU Productive specializations and wage levels are more similar with Spain. Second, the decline of trade costs following the European integration was more drastic between the Iberian countries than between Portugal and the other countries of the EU due to geographic proximity, to linguistic similarity and to the fact that protectionism between the two lberian countries was more severe. A numerical example in the spirit of the "New Economic Geography" approach is used to make this explanation more systematic.
- Sources of convergence in the European Union : the case of PortugalPublication . Pontes, José PedroThe paper surveys the main trends of per capita income convergence in the European Union, It stresses that income disparities have ceased to diminish across the European regions since 1980, although convergence between countries has continued in this period. Income levels have diverged inside each country in a weak sense with two exceptions. Theoretical forces behind income convergence are analized by means of the decomposition of per capita income in labor productivity and employment rate and applied to the stylized facts outlined above. The case of Portugal is regarded as an atypical one, since the country has converged as a whole to the European average and among its regions. The flexibility of the Portuguese labor market is regarded as the main factor behind this performance. However, the limited convergence of labor productivity bounds the expected future performance of the Portuguese economy.
- Multinational firms, integration and economic growthPublication . Pontes, José PedroThe importance and the impacts of horizontal multinational corporations in the context of integration and economic growth processes are examined, A noncooperative game with two firms that choose to have either one or two plants located in two asymmmetric countries is used. The firms compete purely through location. Economic integration has an ambiguous impact upon foreign direct investment. On one hand, it decreases trade costs and easies the access to foreign markets through exports. On the other hand, through economic growth, it increases the size of the markets with relation to plant fixed costs and makes multinationals economicallly feasible. The latter effect, entails a decentralization of production towards the smaller country.
- A geographic game with intermediate goodsPublication . Pontes, José PedroThe paper treats a noncooperative game where an upstream firm and two downstream firms select locations in a spatial system made by two asymmetric countries. The location of the upstream firm is indeterminate and it is assigned to the smaller country, in order to avoid triviality of the location problem. The Nash equilibria of locations of the downstream firms is characterized in the parameter space (coefficient of input transactions, transport cost) although not everywhere uniquely. Keeping the degree of technological interdependency high, economic integration, as measured by the decline of transport costs, shifts production from the country where the input is produced to the larger country. In opposition, keeping transport costs low, technical progress, as measured by the intensity of input transactions, shifts production from the large market to the country where the input is produced.