Propagation Mechanism Of Shocks Research Articles

World uncertainty and commodity currencies

ABSTRACT This paper contributes to the literature by analysing shock propagation mechanisms between world uncertainty, exchange rates and country-specific commodity terms of trade. Using monthly data from 2008 to 2020 for eight commodity currencies’ exchange rates, we analyse the impulse responses based on local projections. The study results show that a shock from the exchange rates which are net transmitters of shocks through the direct United States (US) dollar effect causes world uncertainty to rise and subsequently fall due to the indirect commodity terms of trade effect. Also, in response to world uncertainty shock, the exchange rates fall in the risk-on period and subsequently overshoot during the risk-off period when investors seek the safe haven of the dollar. The world uncertainty shock on the exchange rate is predominantly experienced in the economies that largely trade commodities with the US, particularly Russia and Canada. The study finds evidence that the dollar is a prime cause of world uncertainty. Hence, for policy implications, the study discusses that policymakers, investors, or traders pay attention to the dollar which is the main invoicing currency in the international market.

Financial networks of cryptocurrency prices in time-frequency domains

This paper explores financial networks of cryptocurrency prices in both time and frequency domains. We complement the generalized forecast error variance decomposition method based on a large VAR model with network theory to analyze the dynamic network structure and the shock propagation mechanisms across a set of 40 cryptocurrency prices. Results show that the evolving network topology of spillovers in both time and frequency domains helps towards a more comprehensive understanding of the interactions among cryptocurrencies, and that overall spillovers in the cryptocurrency market have significantly increased in the aftermath of COVID-19. Our findings indicate that a significant portion of these spillovers dissipate in the short-run (1–5 days), highlighting the need to consider the frequency persistence of shocks in the network for effective risk management at different target horizons.

The paradox of price flexibility in an open economy

Empirical evidence suggests that the degree of price stickiness is not uniform around the world. Heterogeneous price stickiness introduces a new propagation mechanism of global demand shocks that lead to a liquidity trap for all countries, which we call the open-economy paradox of flexibility. We show that the severity of the paradox increases with the degree of trade and capital market openness, when home and foreign goods are Edgeworth substitutes and when the more affected home country runs a trade deficit. This implies that highly open trade and financial linkages are not desirable in terms of world welfare. We show that the inefficiencies generated by heterogeneous price stickiness can be reduced through two types of international policy coordination: i) an arrangement in which the country with relatively sticky prices raises the interest rates or ii) a monetary union.

Study on the effect of focal position change on the expansion velocity and propagation mechanism of plasma generated by millisecond pulsed laser-induced fused silica

In this work, by controlling the positional relationship between the target and the focal point, the surface damage, shock wave phenomenon and propagation mechanism involved in the plasma generation of fused silica by millisecond pulsed laser irradiation at different focal positions were studied. Laser energy is an important experimental variable. The dynamic process of plasma was detected by optical shadow method, and the influence of surface film damage on plasma propagation and the propagation mechanism at different focal positions were discussed. The study found that the plasma induced by the pulsed laser at the focus position within 0–20 μs exploded, the micro-droplets formed around 20 μs. At the same time, a shock wave is formed by the compressed air, the micro-droplets are compressed under the action of the shock wave recoil pressure, and the micro-droplets channel phenomenon is observed in the micro-droplets. The peak velocities of plasma and combustion wave appear earlier in the pre-focus position than in the post-focus position. This research provides a reference for the field of laser processing using fused silica as the substrate.

Energy security: Does systemic risk spillover matter? Evidence from China

Considering the severity and frequency of energy risk event shocks, this paper examines whether energy security issue is related to the propagation of significant shocks within the energy system. Relevant researches fail to concern the impact of systemic risk spillovers across energy firms on energy security and its influence mechanisms. By employing a complex network for characterizing risk event shock propagation mechanisms among high-dimensional data, our study captures the transmission of systemic risk among 128 Chinese energy firms from January 2013 to June 2021. Furthermore, using a modified spatial panel model, we find that systemic risk spillovers significantly affect energy security, and the effects are particularly salient in 2015–2016 and under COVID-19. The diffusion of risk event shocks in the Chinese energy system causes a decline in energy production and energy investment, further influencing short- and long-term energy security, respectively. Compared to the energy investment channel during 2015–2016 volatile periods, the negative effect of the COVID-19 crisis on security issues relies more on the energy production channel. The results also show a heterogeneous effect of individual energy firms' risk event shocks on energy security, and the influence of the systemic risk spillovers caused by state-owned firms' risk events is more significant than private firms. Overall, in dealing with frequent energy shocks, collaborations among energy firms, energy sectors, and the government are important for ensuring a country's energy security.

Gravity aspects from recent gravity field model GRGM1200A of the Moon and analysis of magnetic data

The gravity aspects for the Moon (the gravity disturbance, the Marussi tensor, two gravity invariants, dimensionality ratio, the strike angles, and the virtual deformations), all combined with magnetic anomalies and detailed surface topography, allow new views of specific locations on the Moon. Using these new gravity quantities, we hypothesize the following for several features on the Moon. A dike-like intrusion (exceeding ~100 km in length) from inside to outside of the Clavius crater likely solidified at the time of the existence of lunar dynamo. Mare Crisium analyses show a specific distribution of faulting across the mare. The same size impacts, Crisium and Clavius, present the dilatational deformation that is smoother for Crisium, while Clavius is under variable concentric compression due to an uplift of denser rock. Mare Orientale deformation not only confirmed the prior finding of the near surface faults, but also reveals a nature of the faulting (expansion vs compression blocks). Magnetic analyses of related lunar anomalies constrain mascon extent under the Copernicus structure and outline contraction areas from cooling of the upwelled mantle material. Mare Imbrium impact event has demagnetized regolith along with the Copernicus crater using a novel mechanism of shock propagation while plasma demagnetization. Clavius' magnetic field reveals magnetization that is likely more than four billion years old. Mare Crisium impact has a unique magnetization signature by impact related transient field. Mare Orientale showed, for the first-time, rippling-like effect of the Moon's mantle. This process of upwelled rippled mantle allows efficient demagnetization of the Orientale basin. For the first time, the application of the gravity aspects has been extended from the Earth to the Moon. This approach opens a new and inspiring field of planetary studies and point to otherwise hardly detectable phenomena. More detailed studies should follow.

Debt‐to‐GDP changes and the great recession: European Periphery versus European Core

AbstractIn this paper, we use simple accounting schemes and counterfactual experiments, to compare the sources of changes in the public debt to GDP ratio across countries of the European Periphery (Greece, Ireland, Italy, Portugal and Spain), the European Core (Germany and France) and the other G7 countries (Canada, Japan, the United Kingdom and the United States), in two periods—2000–2007 and 2008–2015. In general, Debt‐to‐GDP ratio rose in all countries in the latter period. But the effects of total or primary fiscal deficits, inflation and real growth on the respective Debt‐to‐GDP ratio changes were different across countries in both periods. In the European Core, Ireland and the Anglo‐Saxon countries, successful countercyclical fiscal policies, tended to lower Debt‐to‐GDP ratio. However, in the other European Periphery countries and Japan, unsuccessful countercyclical policies, had the opposite effect. Since in the Euro Area (EA), monetary policy is common and fiscal policies were restricted by rules, this development suggests that differences in shock propagation mechanisms were important drivers of the observed differences in the behaviour of Debt‐to‐GDP ratio between the European Core and the EA Periphery, except Ireland. An implication of this result is that the recently announced EU transfers to the EA Periphery tied up to incentives to improve economic efficiency, seem to be the right policies to ameliorate the effects of the recession brought about by the various social distancing measures to fight the COVID‐19 pandemic, without increasing the Debt‐to‐GDP ratios of these countries.

How influential are COVID–19 data points? A fresh look at an estimated small scale DSGE model for the Philippines

Shocks emanating from the global pandemic continue to reshape the macroeconomic landscape—dimming national growth prospects, prolonging widespread financial distress among households, firms, and governments and heightening uncertainty. Using a small-scale New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model for the Philippines, we examine the model’s sensitivity to COVID-19 datapoints or extreme observations. Relative to estimates during the base period (2002Q1 to 2019Q4), the inclusion of extreme datapoints worsens the model’s log data density progressively, from the consideration of the first quarter of 2020 to the full sample – an indication that shock propagation mechanisms associated with COVID–19 and other natural disasters should be integrated into the model. Even with the inclusion of said extreme observations, however, the model’s parameters are identified, provided identification schemes are evaluated at posterior median estimates. Judging from the sets of parameter estimates relative to the base sample, the effects of extreme observations are found to be non–uniform, especially the size of the shocks. But there are other parameters, notably those that are embedded in the Taylor rule, which are relatively as stable as some household related parameters. These results imply that the size of standard errors for demand, supply, and monetary policy shocks adjust to partially capture the impact of extreme datapoints.

Comment on “Geographic Diversification of the Supply Chains of Japanese Firms”

The worldwide COVID-19 outbreak has impacted on the domestic and international supply chains of Japanese firms. In particular, internationalized production has been blamed for working as a propagation mechanism in the worldwide spread of negative shocks. Todo and Inoue (2021) extensively review existing studies that have examined the shock propagation through supply chains and what characteristics of supply chains enhance or mitigate the propagation, in the cases of previous crises and the current COVID-19 crisis. Based on their literature review and the data observations on the current characteristics of Japan's supply chains, Todo and Inoue highlight the need for more geographical diversification in suppliers and clients of Japanese firms to build robust and resilient supply chains and improve the firms' performance. In the face of the COVID-19 crisis, there has arisen a renewed argument that shorter and simpler supply chains and reshoring production back to the domestic economy would be less vulnerable to shocks. Against this kind of turning-inward policy argument, Todo and Inoue emphasize the potential benefits from supplier substitutability and international knowledge diffusion through geographically diversified supply chains, which is quite meaningful. Nevertheless, I suspect that geographical diversification of trading partners is not the only way to build a resilient supply chain. A firm's optimal strategy for resilience might not coincide with that for robustness. The concept of system resilience was originated in the ecology literature and was applied to the risk management literature. In the light of supply chain management, resilience can be the ability to resume normal operations after an acceptable period of disruption, while robustness is the ability to maintain operations amid a crisis (Miroudot, 2020). Supplier substitutability appears to be a key to achieving robustness. Maintaining geographically diversified suppliers or alternative locations of production would enable firms to withstand a location-specific supply shock, which leads to the greater robustness. To improve resilience, on the other hand, a firm might rather prefer to develop a long-term relationship with a single supplier, or a handful of suppliers such as keiretsu, as discussed in Miroudot (2020), for example. Maintaining a less diversified but close relationship would enable a firm to receive investment or support from the partner for minimizing the time and cost of disrupted operations and facilitating recovery from the disruption, which leads to the greater resilience. Indeed, Todo and Inoue (2021) touch on the possibility that the keiretsu-type relationships would help improve resilience in the case of knowledge-intensive goods. It would be insightful if Todo and Inoue could elaborate on the implications of geographical diversification for the robustness and resilience of supply chains with more careful consideration of the two related but distinct concepts. In addition, I am skeptical of Todo and Inoue's policy suggestion that the Japanese government should intervene to promote the geographical diversification of suppliers. The diversification of suppliers is not necessarily an optimal strategy from the firm's perspective, depending on whether the firm prioritizes the robustness or resilience of supply chain as well as on the firm's product or industry characteristics. Even if the current level of diversification is less than the optimal level as argued by Todo and Inoue, a government inevitably faces implementational challenges on the intervention and possibly distorts a firm's decision on production locations and sourcing patterns, which could force the choice of an inefficient location. Rather, a government should devote itself to ensuring an environment where firms can build and develop domestic and international supply chains as they need, as a basis for economic growth, which brings greater efficiency, expands the production frontier, and facilitates technology and knowledge diffusion and spillovers. Last but not least, Todo and Inoue's literature review and accompanying discussion focus on the effects on supply chains of supply shocks such as natural disasters. When thinking of the robustness and resilience against the current COVID-19 spread, however, we should be aware that COVID-19 generated both supply and demand shocks. As a result of social-distancing policies, industries relying on the movement of people, such as hotels, restaurants, and passenger transport services, have been impacted greatly through the fall in domestic final demand. It would be worth discussing the robustness and resilience of supply chains not only against supply shocks but also against demand shocks. Does the shock propagation mechanism of supply chains matter to a similar degree and work in a similar way in the case of demand shocks as in supply shocks? The firm's strategy for robustness or resilience of concern also would depend on the source of shocks. Todo and Inoue could discuss on this further.

Re-examining public debt and current account dynamics: SVAR evidence from Ethiopia

PurposePublic debt management is now an integral part of overall macroeconomic management in many developing and emerging market economies. Preventing unsustainable debt accumulation and maintaining healthy fiscal profile begins with understanding its key drivers both in the short and in the long run. The purpose of this paper is to analyze public debt and current account dynamics in Ethiopia.Design/methodology/approachThis study applies structural vector auto-regressive (SVAR) model on annual time series data to study general government debt and current account dynamics in Ethiopia for the period 1980–2018.FindingsBoth the impulse response and forecast error variance decomposition results confirm that fiscal balance exerts the strongest influence on both government debt and current account balance in the short run. In addition, own shock as well as shocks stemming from gross fixed capital formation and growth have significant effects on general government debt. The findings were robust to alternative data transformation, differing Choleski ordering of the model variables, and inclusion of exogenous deterministic terms that capture changes in the political landscape.Practical implicationsThe most important implication is that since fiscal balance is the strongest determinant of both public debt and current account balance, public investment efficiency is relevant here than anywhere else in the national economy. A recent study by Barhoumi et al. (2018) found that the sub-Saharan region lags behind its peers in terms of public sector investment efficiency with inefficiency gap of as large as 54% depending on the indicator variable for public investment output. Improving public investment spending efficiency would reduce government debt by enhancing productivity and growth – which has significant negative effect on public debt.Originality/valueFirst, the few studies conducted on Ethiopia are dominated by single equation specifications and do not account for the possibility of endogenous feedback effects among the model variables. Second, still equally important is the role of rising gross fixed capital formation in Ethiopia, which increased from about 13% (relative to GDP) in the 1980s to about 35% in the 2010s. Ignoring this variable amounts to a major model misspecification when analyzing short-run macro dynamics in low-income economies. Finally, the paper complements existing limited studies on Ethiopia by comparing the strength of shock propagation mechanisms using alternative data transformation techniques.

Does COVID-19 open a Pandora's box of changing the connectedness in energy commodities?

With the rapid spread of coronavirus, the global financial markets have been undergoing tremendous changes, which bring investors more risks in the short term. Against such background, this study concentrates on the far-reaching energy commodities, aiming to explore the impact of COVID-19 on cross-market linkages. To capture the dynamic nature of interdependence, we applied the TVP-VAR based connectedness index method and individually focused on the total, net, and pairwise connectedness. The empirical results show that there is a dramatic rise in the total connectedness in energy markets following the outbreak of COVID-19, but this change only lasted about two months and then fell back to the prior level. Further analyzing the net spillover conditions, we find that the connectedness structure has also displayed some temporary changes. At last, the spillover networks indicate that there are only three pairwise connectedness relations have changed in direction before and after the outbreak of COVID-19. We also try to discuss the underlying COVID-19 shock propagation mechanism, and the results suggest the significant mediation effect of the financial panic risk. In general, our study offers several urgent and prominent implications to understand the financial impact of COVID-19.

The Analysis of Business Cycle in a Small Open Economy

Purpose - The purpose of this paper is to investigate the effect of structural shocks on the Korean macroeconomy using Dynamic Stochastic General Equilibrium(DSGE). Design/methodology/approach - The small open economy model has been applied with the price rigidity and monopolistic competition assumption. After that, using the Bayesian inference method, the structural model with forward looking variables have been estimated. Findings - First, with the bayesian estimation with prior parameters and distribution, the estimated parameters are consistent with existing results and are within the range of reasonable values. Second, looking at the impulse response functions when the technology shock happens in the model, the aggregate income increases due to the substitution of consumption-leisure and domestic and foreign goods. In addition, as a result of the shock, both domestic and consumer prices decrease. Third, when there is a foreign income shock, the output increases because the export increases and households substitute the domestic goods from the foreign goods. Research implications or Originality - Increasing market opening can increase volatility in domestic output and inflation. Therefore, monetary authorities need to carefully monitor changes in overseas shock factors and analyze economic changes and the propagation mechanism of shocks in detail in order to promote economic stabilization.

Shock Wave Generation and Radiation from a Turbofan Engine Under Flow Distortion

This paper presents aeroacoustic investigations on a full-scale ultrahigh-bypass-ratio engine with inflow distortion at transonic conditions. Computational fluid dynamics (CFD) simulations are first realized to compute the shocks in the vicinity of the fan. These shocks are then radiated in the near field thanks to computational aeroacoustics (CAA) simulations. The chaining between CFD and CAA simulations is done by injecting the shocks in terms of usual conservative variables using a nonreflecting boundary condition. The CAA solver is based on the nonlinearized Euler equations, which allows definition of the CFD/CAA interface close to the fan where the propagation of shocks is highly nonlinear. Both shock generation and propagation mechanisms are investigated, and the effects of inflow distortion are highlighted by comparison with a baseline case without distortion. The flow distortion is shown to be responsible for a modification of shock amplitudes along the circumferential direction. Thus, azimuthal modes appear in addition to the rotor-locked mode present without distortion. A particular feature of the studied configuration is the presence of a supersonic flow region in the bottom part of the nacelle. This supersonic pocket blocks the shocks in the lower half of the nacelle and modifies the angle at which they leave the nacelle in its upper half. Consequently, the far-field radiation (obtained using Kirchhoff’s integral method) is mainly oriented skyward and toward the side of descending blades. Acoustic power estimates are provided to quantify these effects.

Greek economic policy uncertainty: Does it matter for Europe? Evidence from a dynamic connectedness decomposition approach

This study examines the propagation mechanism of economic policy uncertainty shocks within Greece and between Greece and Europe over the period of January, 1998 and May, 2018. Further insights about the Greek-internal and external dynamics of economic policy uncertainty are provided by employing the recently developed dynamic connectedness decomposition approach of Gabauer and Gupta (2018). Our analysis reveals that Greek economic policy uncertainty is dominating the European economic policy uncertainty nearly permanently throughout the period of analysis. In particular, the Greek banking policy uncertainty (capital controls) and Greek currency policy uncertainty (Grexit rumors) have been significant net pairwise transmitters with respect to the European economic policy uncertainty. In addition, the Greek-internal transmission mechanism indicates that, Greek fiscal policy uncertainty indices are driven by Greek related monetary policy indices. Finally, our impulse response analysis suggests that the persistence of monetary policy related shocks is varying over time and increased after the Global Financial Crisis of 2007–2009. This magnifying effect explains partially the prolonged recovery of the European economy.

Does oligopolistic banking friction amplify small open economy's business cycles? Evidence from Australia

This paper studies financial friction arising from oligopolistic bank competition and its impacts on a small open economy's business cycles by applying imperfect competition and endogenous firm entry theory. Using Australian data, the estimated model implies a countercyclical mark up in lending rate that varies inversely with number of banks. Such bank sector has a distinct shock propagation mechanism that often amplifies business cycles, depending on the type of shock. Balance sheet effects appear different compared to competitive banks, due to strategic bank behaviour. Unlike previous estimated small open economy general equilibrium studies, the model can capture substantial international transmissions.

Crude oil futures trading and uncertainty

This paper examines the effect of different dimensions of uncertainty on expectations of WTI crude oil futures momentum traders at a daily level. We consider two concepts of uncertainty and two momentum trading indicators based on technical analysis. In addition, we also use wavelet techniques to decompose crude oil futures prices into different frequencies accounting for investors' sentiment at various horizons. To allow for different effects on the propagation mechanism of uncertainty shocks, we apply a time-varying Bayesian VAR approach. Our findings indicate that both measures of uncertainty affect momentum trading on the crude oil futures market in several periods, especially during the great recession between 2007 and 2009. For the decomposed futures prices our results also show that the reaction to uncertainty differs substantially across frequencies. High frequencies exhibit a very short-lived reaction to uncertainty while low frequencies show a persistent reaction to uncertainty shocks.

Financial vs. Policy Uncertainty in Emerging Market Economies

While the negative effect of uncertainty shocks on economic activity is well documented in many empirical studies, little is known about the extent to which the effect differs across various kinds of uncertainty, especially in the emerging market economy context. Using the newly available economic policy uncertainty index from six emerging market economies (Brazil, Chile, China, India, Korea, and Russia), we compare the impact of financial uncertainty shocks—measured by stock market volatility—and that of policy uncertainty shocks on the economy. We find that financial uncertainty shocks have much larger and more significant impact on output than policy uncertainty shocks, except for China where the government has direct controls over financial market activity. While our finding differs from the existing studies about advanced economies that find no smaller effects of policy uncertainty shocks on output than financial uncertainty shocks, it is consistent with the recent emphasis on financial frictions as a propagation mechanism of uncertainty shocks.

Does Oligopolistic Banking Friction Amplify Small Open Economyys Business Cycles?: Evidence From Australia

This paper studies financial friction arising from oligopolistic bank competition and its impacts on small open economy’s business cycles by applying imperfect competition and endogenous firm entry theory. Using Australian data, the estimated model implies a counter-cyclical mark up in lending rate that varies inversely with number of banks. Such bank sector has a distinct shock propagation mechanism that often amplifies business cycles, depending on the type of shock. Balance sheet effects appear different compared to competitive banks, due to strategic bank behavior. Unlike previous estimated small open economy general equilibrium studies, the model can capture substantial international transmissions.

Effects of air injection on the characteristics of unsteady sheet/cloud cavitation shedding in the convergent-divergent channel

The objective of this paper is to investigate the effects of air injection on the characteristics of two different unsteady sheet/cloud cavitation shedding mechanisms, namely re-entrant flow mechanism and bubbly shock propagation mechanism, in the convergent-divergent channel. Experiments were conducted in the 10° divergent section with a ventilation slit near the throat, using a simultaneous sampling technique to synchronize the transient cavity behaviors with wall-pressure signals. Results are presented at a Reynolds number 9.33 × 105 and Froude number 10.24 for (1) under re-entrant flow mechanism (σ = 0.81) characterized by the intermittent shedding of small-scale cavities, and (2) under bubbly shock propagation mechanism (σ = 0.70) characterized by periodic large-scale cavity cloud shedding, with three non-dimensional air injection volumetric flow rates, namely 0, 1.135 × 10−3 and 2.270 × 10−3. The results show that air injection from the throat into the shear layer can significantly suppress cavitation induced unsteady pressure fluctuations. With the increasing of air flow rate, the size of the attached sheet cavity and the shedding cavity clusters grows larger, and the distance between the new attached sheet cavity and the shedding cavity cloud decreases, resulting in the cavitation region misty. The cavitation evolution tends to be stable, indicating the increase in the cavitation cycle, and the FFT analysis of the unsteady pressure fluctuations shows the decrease in dominant frequency. For the re-entrant flow mechanism condition, air injection rate at 1.135 × 10−3 will cause the transition from small-scale cavity clusters shedding to large-scale cavity cloud shedding, accompanying with pressure fluctuations increasing. With the air injection rate further increase, the pressure fluctuations decrease. Air injection can significantly reduce the unsteady pressure fluctuations spectral content in the frequency range of 1 kHz to 10 kHz. For the bubbly shock propagation mechanism condition, air injection can avoid the formation and propagation of the bubbly shock and suppress both the pressure peaks and pressure fluctuations. With the increase in the air injection rate, the unsteady pressure fluctuations are further suppressed. The unsteady pressure spectral content between 0.2 kHz and 10 kHz is effectively reduced.

Market and political power interactions in Greece: an empirical investigation

In this paper, using a dynamic panel of 21 OECD countries, we find that, unlike the other OECD countries in the sample, wage setting institutions, competition conditions, public finances, and external imbalances can account for the behavior of the public sector wage premium (WPR) and the self-employed taxation gap (TSL) in Greece and to a lesser extent in Spain and Portugal, in a manner that is consistent with an “insider–outsider society” (IOS). That is, a politicoeconomic system characterized by groups of selfish elites that enjoy market power but at the same time cooperate in influencing government in protecting and promoting their collective self-interests. Then, we find that for Greece as well as Spain and Portugal, WPR and TSL have an adverse effect on both TFP and output growth. Finally, the effect of WPR and TSL on the business cycle (shock propagation mechanism) is investigated via a panel VAR analysis. Again, impulse response function analysis suggests that the shock propagation mechanisms of WPR and TSL for Greece and to a lesser extent for Spain and Portugal are quite different from the rest of the OECD countries. For example, in Greece, unlike the other OECD countries in the sample, a positive temporary shock in WPR causes TFP and output to fall and the public and current account deficits to increase. We take the TFP/output growth and the shock propagation mechanism results to provide strong evidence that Greece and to a lesser extent Spain and Portugal behave like IOS. For that matter, these results are important in order to understand the Greek crisis.