No dia 7 de outubro, entre as 13h00 e as 14h00, tem lugar uma sessão dos ISEG Research Seminars. O orador convidado será Vik Singh da Toronto Metropolitan University. Esta sessão decorre no Anfiteatro 4 (Edifício Quelhas, 4º piso).
Os Seminários ISEG Research decorrem semanalmente, às quartas-feiras, contando com a participação de docentes do ISEG, bem como de outras instituições de ensino nacionais e internacionais.
Title: Regional integration as a selective institutional buffer: geopolitical risk, policy uncertainty, and financial market resilience
Abstract: This study introduces the Selective Institutional Shielding Hypothesis (SIHS), which posits that regional institutional architecture moderates the transmission of geopolitical risk and economic policy uncertainty into middle-power financial markets. However, this buffering capacity is asymmetric: it is effective against domestically generated shocks but leaves markets vulnerable to externally transmitted shocks. Drawing on institutional theory, Dunning’s eclectic Ownership-Location-Internationalization framework, and the regionalization perspective, the analysis proposes that supranational integration operates through four mechanisms: monetary credibility, regulatory harmonization, collective policy coordination, and shock-sharing. These mechanisms collectively reduce the domestic risk premium for firms embedded within deeper regional blocs. In contrast, bilateral market-access arrangements ensure trade continuity but lack the sovereignty-pooling and stabilization features necessary for robust institutional buffering.
The hypothesis is tested through a comparative analysis of Canada and Spain, two middle-power economies with structural similarities but fundamentally different institutional architectures. In Spain, domestic GPR is statistically insignificant at both the aggregate and sectoral levels, consistent with the European Union functioning as an institutional shock absorber for country-specific geopolitical instability. In Canada, domestic risk is negatively priced in regulated and institutionally sensitive sectors such as utilities, consumer staples, and resources, while US economic policy uncertainty generates a significant negative aggregate market effect. This outcome reflects the dominance-dependence dynamic inherent in a bilateral arrangement with an asymmetric partner. Neither country is insulated from externally transmitted shocks; global geopolitical risk produces broadly negative sectoral effects in both economies, confirming the SIHS prediction of selective rather than universal buffering.
