Mercosur: past, present, and future

In March 2003, the Southern Common Market (Mercosur) celebrated its twelfth anniversary. In twelve years, the bloc went from a substantially restricted trade structure to a practically free-trade area, with additional efforts in establishing a customs union and progressing toward a common market. Despite these advances, the integration process has experienced setbacks as the result of such different economic phenomena as the Asian financial crisis, Brazil's currency devaluation and, later, economic uncertainty in Argentina. Setbacks to the integration process create credibility issues and could jeopardize the future of the process. This paper discusses the current level of economic integration of Mercosur, the speed of the process, and the resulting mixed level of different stages of economic integration. It also discusses the main achievements in the last twelve years, identifies the shortcomings as well as the opportunities and challenges facing the bloc in the near future.Mercosur, economic integration, trade policy, globalization

Analysis of a chemotaxis system modeling ant foraging

In this paper we analyze a system of PDEs recently introduced in [P. Amorim, {\it Modeling ant foraging: a {chemotaxis} approach with pheromones and trail formation}], in order to describe the dynamics of ant foraging. The system is made of convection-diffusion-reaction equations, and the coupling is driven by chemotaxis mechanisms. We establish the well-posedness for the model, and investigate the regularity issue for a large class of integrable data. Our main focus is on the (physically relevant) two-dimensional case with boundary conditions, where we prove that the solutions remain bounded for all times. The proof involves a series of fine \emph{a priori} estimates in Lebesgue spaces.Comment: 39 page

Regularization of Discontinuous Foliations: Blowing up and Sliding Conditions via Fenichel Theory

We study the regularization of an oriented 1-foliation $\mathcal{F}$ on $M \setminus \Sigma$ where $M$ is a smooth manifold and $\Sigma \subset M$ is a closed subset, which can be interpreted as the discontinuity locus of $\mathcal{F}$. In the spirit of Filippov's work, we define a sliding and sewing dynamics on the discontinuity locus $\Sigma$ as some sort of limit of the dynamics of a nearby smooth 1-foliation and obtain conditions to identify whether a point belongs to the sliding or sewing regions.Comment: 32 page

Enriching Information to Prevent Bank Runs

Sequential service in the banking sector, as modeled by Diamondand Dybvig (1983), is a barrier to full insurance and potential source offinancial fragility against which deposit insurance is infeasible (Wallace,1988). In this paper, we pursue a different perspective, viewingthe sequence of contacts as opportunities to extract informationthrough a larger message space with commitment to richer promises.As we show, if preferences satisfy a separating property then the desiredelimination of dominated strategies (Green and Lin, 2003) occurseven when shocks are correlated. In this manner the sequential servicepromotes stability.

FDI and institutional reform in Portugal

This article analyses the effects of several geographic, economic and institutional factors on bilateral inward FDI in Europe. Moreover, it assesses the required reform effort, and the expected benefits, for Portugal to converge with the EU in the institutional variables that are relevant to attract investment. We conclude that good institutions favouring economic freedom and the ease of doing business, and geography, market size and labor costs, affect bilateral inward FDI. Political risk does not lead to significant differences in FDI across the EU. The results are robust to different methods – principal component analysis, factor-based scores and by considering several institutional indicators successively. We also find that most promising reforms arise in the financial system, corruption, property rights, and in some business regulations associated with starting a business. Increasing labor market flexibility to the EU level has also a large impact on inward FDI, but this reform comes at a comparatively higher effort.FDI, Institutional reform, Institutions, Portugal, EU