We present a structural model of the U.S. economy that combines our price-contracting specification with a term-structure relationship, an aggregate demand curve, and a monetary-policy reaction function. The model matches important features of postwar data well and provides a structural explanation of the correlation between real output and the short-term nominal rate of interest. We perform a battery of monetary-policy experiments which show that, as viewed through the lens of this model, monetary policy has struck a good balance recently among competing monetary-policy objectives.

Closed-end country funds can trade at large premiums and discounts from their foreign asset values (NAVs). Investigating this anomaly, we find that individual fund premiums move together, primarily because of the comovement of their stock prices with the U.S. market. Moreover, an index of country fund premiums differentiates size-ranked U.S. portfolio returns and forecasts country fund stock returns. These findings suggest that international equity prices are affected by local risk. In particular, we show that country fund premium movements reflect a U.S.-specific risk, which may be interpreted as U.S. market sentiment.

The authors examine the performance of common stock recommendations made by prominent money managers at Barron's Annual Roundtable from 1968 to 1991. To avoid survivorship bias, they examine the performance of recommendations by all the participants. The buy recommendations earn significant abnormal returns of 1.91 percent from the recommendation day to the publication day, a period of about fourteen days. However, the abnormal returns are essentially zero for one to three year postpublication day holding periods. Thus, an individual investing according to the Roundtable recommendations published in in Barron's would not benefit from the advice.

Regressions of multiple-period changes in the log exchange rate on the deviation of the log exchange rate from its 'fundamental value' display evidence that long-horizon changes in log nominal exchange rates contain an economically significant predictable component. To account for small-sample bias and size distortion in asymptotic tests, inference is drawn from bootstrap distributions generated under the null hypothesis that the log exchange rate is unpredictable. The bias-adjusted slope coefficients and R[superscript]2's increase with the forecast horizon, and the out-of-sample point predictions generally outperform the driftless random walk at the longer horizons. Copyright 1995 by American Economic Association.

Examines the question of whether direct solicitation rules affect auditors' decisions regarding the type of audit report to issue. Effect on audit quality by the removal of bans on direct uninvited solicitation; Associations between information dissemination, client-author alignment and auditor independence.

[Many states removed their bans on direct univited solicitation during the 1980s, while others retained their restrictions. This period of contrast provides an opportunity to examine and provide insight into associations that exist among information dissemination, client-auditor alignment, and auditor independence. Although concerns have been voiced that recent changes in competitive conditions in the audit market are detrimental to audit quality, we present arguments and evidence to the contrary. Results of a logistic regression analysis suggest that, ceteris paribus, auditors in the market allowing solicitation are more likely than those in the market banning solicitation to issue a nonstandard report.]