Although the real exchange rate–real interest rate (RERI) relationship is central to most open economy macroeconomic models, empirical support for the relationship is generally found to be rather weak. In this paper we re-investigate the RERI relationship using bilateral US real exchange rate data spanning the period 1978–2007. Instead of testing one particular model, we build on Campbell and Shiller [1987. Cointegration tests of present-value models. Journal of Political Economy 95, 1062–1088] to propose a metric of the economic significance of the relationship. Our empirical results provide robust evidence that the RERI link is economically significant and that the real interest rate differential is a reasonable approximation of the expected rate of depreciation over longer horizons.
Neuroimaging can address activity across the entire brain in relation to cognition, but is typically correlative rather than causal. Brain stimulation can target a local brain area causally, but without revealing the entire network affected. Combining brain stimulation with concurrent neuroimaging allows a new causal approach to how interplay between extended networks of brain regions can support cognition. Brain stimulation does not affect only the targeted local region but also activity in remote interconnected regions. These remote effects depend on cognitive factors (e.g. task-condition), revealing dynamic changes in interplay between brain areas. We illustrate this with examples from top-down modulation of visual cortex, response-competition, inter-hemispheric rivalry and motor tasks; but the new approach should be applicable to many domains of cognition.
The sum of a supermodular function, assumed nondecreasing in the choice variable, and of a 'concavely supermodularizable' function, assumed nonincreasing in the parameter variable, satisfies the Milgrom-Shannon (1994, Monotone comparative statics, Econometrica 62, 157-180) single crossing condition. As an application, I prove existence of a pure strategy Nash equilibrium in a Cournot duopoly with logconcave demand, affiliated types, and nondecreasing costs.
Studies investigating emotion recognition in patients with schizophrenia predominantly presented photographs of facial expressions. Better control and higher flexibility of emotion displays could be afforded by virtual reality (VR). VR allows the manipulation of facial expression and can simulate social interactions in a controlled and yet more naturalistic environment. However, to our knowledge, there is no study that systematically investigated whether patients with schizophrenia show the same emotion recognition deficits when emotions are expressed by virtual as compared to natural faces. Twenty schizophrenia patients and 20 controls rated pictures of natural and virtual faces with respect to the basic emotion expressed (happiness, sadness, anger, fear, disgust, and neutrality). Consistent with our hypothesis, the results revealed that emotion recognition impairments also emerged for emotions expressed by virtual characters. As virtual in contrast to natural expressions only contain major emotional features, schizophrenia patients already seem to be impaired in the recognition of basic emotional features. This finding has practical implication as it supports the use of virtual emotional expressions for psychiatric research: the ease of changing facial features, animating avatar faces, and creating therapeutic simulations makes validated artificial expressions perfectly suited to study and treat emotion recognition deficits in schizophrenia.
The processing of visual and haptic inputs, occurring either separately or jointly, is crucial for everyday-life object recognition, and has been a focus of recent neuroimaging research. Previously, visuohaptic convergence has been mostly investigated with matching-task paradigms. However, much less is known about visuohaptic convergence in the absence of additional task demands. We conducted two functional magnetic resonance imaging experiments in which subjects actively touched and/or viewed unfamiliar object stimuli without any additional task demands. In addition, we performed two control experiments with audiovisual and audiohaptic stimulation to examine the specificity of the observed visuohaptic convergence effects. We found robust visuohaptic convergence in bilateral lateral occipital cortex and anterior cerebellum. In contrast, neither the anterior cerebellum nor the lateral occipital cortex showed any involvement in audiovisual or audiohaptic convergence, indicating that multisensory convergence in these regions is specifically geared to visual and haptic inputs. These data suggest that in humans the lateral occipital cortex and the anterior cerebellum play an important role in visuohaptic processing even in the absence of additional task demands.
Difficulties in social cognition are well recognized in individuals with autism spectrum conditions (henceforth 'autism'). Here we focus on one crucial aspect of social cognition: the ability to empathize with the feelings of another. In contrast to theory of mind, a capacity that has often been observed to be impaired in individuals with autism, much less is known about the capacity of individuals with autism for affect sharing. Based on previous data suggesting that empathy deficits in autism are a function of interoceptive deficits related to alexithymia, we aimed to investigate empathic brain responses in autistic and control participants with high and low degrees of alexithymia. Using functional magnetic resonance imaging, we measured empathic brain responses with an 'empathy for pain' paradigm assessing empathic brain responses in a real-life social setting that does not rely on attention to, or recognition of, facial affect cues. Confirming previous findings, empathic brain responses to the suffering of others were associated with increased activation in left anterior insula and the strength of this signal was predictive of the degree of alexithymia in both autistic and control groups but did not vary as a function of group. Importantly, there was no difference in the degree of empathy between autistic and control groups after accounting for alexithymia. These findings suggest that empathy deficits observed in autism may be due to the large comorbidity between alexithymic traits and autism, rather than representing a necessary feature of the social impairments in autism.
Functional neuroimaging investigations in the fields of social neuroscience and neuroeconomics indicate that the anterior insular cortex (AI) is consistently involved in empathy, compassion, and interpersonal phenomena such as fairness and cooperation. These findings suggest that AI plays an important role in social emotions, hereby defined as affective states that arise when we interact with other people and that depend on the social context. After we link the role of AI in social emotions to interoceptive awareness and the representation of current global emotional states, we will present a model suggesting that AI is not only involved in representing current states, but also in predicting emotional states relevant to the self and others. This model also proposes that AI enables us to learn about emotional states as well as about the uncertainty attached to events, and implies that AI plays a dominant role in decision making in complex and uncertain environments. Our review further highlights that dorsal and ventro-central, as well as anterior and posterior subdivisions of AI potentially subserve different functions and guide different aspects of behavioral regulation. We conclude with a section summarizing different routes to understanding other people's actions, feelings and thoughts, emphasizing the notion that the predominant role of AI involves understanding others' feeling and bodily states rather than their action intentions or abstract beliefs.
Little is known about the neurobiological mechanisms underlying prosocial decisions and how they are modulated by social factors such as perceived group membership. The present study investigates the neural processes preceding the willingness to engage in costly helping toward ingroup and outgroup members. Soccer fans witnessed a fan of their favorite team (ingroup member) or of a rival team (outgroup member) experience pain. They were subsequently able to choose to help the other by enduring physical pain themselves to reduce the other's pain. Helping the ingroup member was best predicted by anterior insula activation when seeing him suffer and by associated self-reports of empathic concern. In contrast, not helping the outgroup member was best predicted by nucleus accumbens activation and the degree of negative evaluation of the other. We conclude that empathy-related insula activation can motivate costly helping, whereas an antagonistic signal in nucleus accumbens reduces the propensity to help.
