Hong Kong's Currency Board and Changing Monetary Regimes

The paper discusses the historical background and institutional details of Hong Kong's currency board. We argue that its experience provides a good opportunity to test the macroeconomic implications of the currency board regime. Using the method of Blanchard and Quah (1989), we show that the parameters of the structural equations and the characteristics of supply and demand shocks have significantly changed since adopting the regime. Variance decomposition and impulse response analyses indicate Hong Kong's currency board is less susceptible to supply shocks, but demand shocks can cause greater short-term volatility under the system. The decent performance of Hong Kong's currency board is due mainly to the stable fiscal policy of its government. Counter-factual exercises also show that three-fourths of the reduction in observed output volatility and two-thirds of that in observed inflation volatility are explained by the adoption of the currency board, while the remainder is explained by changes in the external environment. The improvement in stability does not rule out the possibility of monetary collapse, however.

Brain-wide functional inter-hemispheric disconnection is a potential biomarker for schizophrenia and distinguishes it from depression

Schizophrenia is associated with disconnectivity in the brain although it is still unclear whether changes within or between hemispheres are of greatest importance. In this paper, an analysis of 152 schizophrenia patients compared with 122 healthy controls was carried out. Comparisons were also made with 39 depression patients and 37 controls to examine whether brain-wide changes in inter- or intra-hemispheric functional connectivity are most associated with the disorder and can distinguish it from depression. The authors developed new techniques (first and second order symmetry) to investigate brain-wide changes in patients (45 regions per hemisphere) and their association with illness duration and symptom severity. Functional connectivity between the same regions in left- and right-hemispheres (first order symmetry) was significantly reduced as was that between the same pairs of regions in the left- and right-hemispheres (second order symmetry) or using all possible inter-hemispheric connections in schizophrenia patients. By contrast, no significant changes were found for brain-wide intra-hemispheric links. First order symmetry changes correlated significantly with positive and negative symptom severity for functional connections linked via the anterior commissure and negative symptoms for those linked via the corpus callosum. Support vector machine analysis revealed that inter-hemispheric symmetry changes had 73–81% accuracy in discriminating schizophrenia patients and either healthy controls or depressed patients. In conclusion, reduced brain-wide inter-hemispheric functional connectivity occurs in schizophrenia, is associated with symptom severity, and can discriminate schizophrenia patients from depressed ones or healthy controls. Brain-wide changes in inter-hemispheric connections may therefore provide a useful potential biomarker for schizophrenia