The Predictive Information Content of External Imbalances for Exchange Rate Returns: How Much Is It Worth?

This paper examines the exchange rate predictability stemming from the equilibrium model of international financial adjustment developed by Gourinchas and Rey (2007). Using predictive variables that measure cyclical external imbalances for country pairs, we assess the ability of this model to forecast out-of-sample four major US dollar exchange rates using various economic criteria of model evaluation. The analysis shows that the model provides economic value to a risk-averse investor, delivering substantial utility gains when switching from a portfolio strategy based on the random walk benchmark to one that conditions on cyclical external imbalances.foreign exchange; predictability; global imbalances; fundamentals.

Illusions of Visual Motion Elicited by Electrical Stimulation of Human MT Complex

Human cortical area MT+ (hMT+) is known to respond to visual motion stimuli, but its causal role in the conscious experience of motion remains largely unexplored. Studies in non-human primates demonstrate that altering activity in area MT can influence motion perception judgments, but animal studies are inherently limited in assessing subjective conscious experience. In the current study, we use functional magnetic resonance imaging (fMRI), intracranial electrocorticography (ECoG), and electrical brain stimulation (EBS) in three patients implanted with intracranial electrodes to address the role of area hMT+ in conscious visual motion perception. We show that in conscious human subjects, reproducible illusory motion can be elicited by electrical stimulation of hMT+. These visual motion percepts only occurred when the site of stimulation overlapped directly with the region of the brain that had increased fMRI and electrophysiological activity during moving compared to static visual stimuli in the same individual subjects. Electrical stimulation in neighboring regions failed to produce illusory motion. Our study provides evidence for the sufficient causal link between the hMT+ network and the human conscious experience of visual motion. It also suggests a clear spatial relationship between fMRI signal and ECoG activity in the human brain

Speech and Non-Speech Audio-Visual Illusions: A Developmental Study

It is well known that simultaneous presentation of incongruent audio and visual stimuli can lead to illusory percepts. Recent data suggest that distinct processes underlie non-specific intersensory speech as opposed to non-speech perception. However, the development of both speech and non-speech intersensory perception across childhood and adolescence remains poorly defined. Thirty-eight observers aged 5 to 19 were tested on the McGurk effect (an audio-visual illusion involving speech), the Illusory Flash effect and the Fusion effect (two audio-visual illusions not involving speech) to investigate the development of audio-visual interactions and contrast speech vs. non-speech developmental patterns. Whereas the strength of audio-visual speech illusions varied as a direct function of maturational level, performance on non-speech illusory tasks appeared to be homogeneous across all ages. These data support the existence of independent maturational processes underlying speech and non-speech audio-visual illusory effects

Top-down and bottom-up modulation in processing bimodal face/voice stimuli

<p>Abstract</p> <p>Background</p> <p>Processing of multimodal information is a critical capacity of the human brain, with classic studies showing bimodal stimulation either facilitating or interfering in perceptual processing. Comparing activity to congruent and incongruent bimodal stimuli can reveal sensory dominance in particular cognitive tasks.</p> <p>Results</p> <p>We investigated audiovisual interactions driven by stimulus properties (bottom-up influences) or by task (top-down influences) on congruent and incongruent simultaneously presented faces and voices while ERPs were recorded. Subjects performed gender categorisation, directing attention either to faces or to voices and also judged whether the face/voice stimuli were congruent in terms of gender. Behaviourally, the unattended modality affected processing in the attended modality: the disruption was greater for attended voices. ERPs revealed top-down modulations of early brain processing (30-100 ms) over unisensory cortices. No effects were found on N170 or VPP, but from 180-230 ms larger right frontal activity was seen for incongruent than congruent stimuli.</p> <p>Conclusions</p> <p>Our data demonstrates that in a gender categorisation task the processing of faces dominate over the processing of voices. Brain activity showed different modulation by top-down and bottom-up information. Top-down influences modulated early brain activity whereas bottom-up interactions occurred relatively late.</p

Activity in Inferior Parietal and Medial Prefrontal Cortex Signals the Accumulation of Evidence in a Probability Learning Task

In an uncertain environment, probabilities are key to predicting future events and making adaptive choices. However, little is known about how humans learn such probabilities and where and how they are encoded in the brain, especially when they concern more than two outcomes. During functional magnetic resonance imaging (fMRI), young adults learned the probabilities of uncertain stimuli through repetitive sampling. Stimuli represented payoffs and participants had to predict their occurrence to maximize their earnings. Choices indicated loss and risk aversion but unbiased estimation of probabilities. BOLD response in medial prefrontal cortex and angular gyri increased linearly with the probability of the currently observed stimulus, untainted by its value. Connectivity analyses during rest and task revealed that these regions belonged to the default mode network. The activation of past outcomes in memory is evoked as a possible mechanism to explain the engagement of the default mode network in probability learning. A BOLD response relating to value was detected only at decision time, mainly in striatum. It is concluded that activity in inferior parietal and medial prefrontal cortex reflects the amount of evidence accumulated in favor of competing and uncertain outcomes