Modelling spatial recall, mental imagery and neglect

We present a computational model of the neural mechanisms in the pari-etal and temporal lobes that support spatial navigation, recall of scenes and imagery of the products of recall. Long term representations are stored in the hippocampus, and are associated with local spatial and object-related features in the parahippocampal region. Viewer-centered representations are dynamically generated from long term memory in the parietal part of the model. The model thereby simulates recall and im-agery of locations and objects in complex environments. After parietal damage, the model exhibits hemispatial neglect in mental imagery that rotates with the imagined perspective of the observer, as in the famous Milan Square experiment [1]. Our model makes novel predictions for the neural representations in the parahippocampal and parietal regions and for behavior in healthy volunteers and neuropsychological patients.

What Drives the Relationship Between Inflation and Price Dispersion? Market Power vs. Price Rigidity

Recent monetary search and Calvo-type models predict that the relationship between inflation and price dispersion is U-shaped, implying an optimal rate of inflation above zero. Moreover, monetary search models emphasize a critical dependence of the real effects of inflation on sellers’ market power, whereas Calvotype models suggest that the degree of price rigidity significantly affects the inflation - price dispersion nexus. Using a new set of highly disaggregated sectoral price data from a panel of European countries, this paper contributes to the literature by testing the empirical relevance of these two theoretical predictions. In line with monetary search theory, a U-shaped profile is found, provided that markups are sufficiently high, but the relationship breaks down under a more competitive environment. Contrarily, no evidence is found to support the contentions of Calvo-type models: U-shaped effects of inflation occur in product sectors with sticky as well as highly flexible prices.Inflation, Relative price variability, Price level index, Euro-area, Market structure, Monetary search model, Dynamic panel data models