For helpful comments on earlier drafts, we thank, without implicating, Moses Abramovitz, Yves Balcer, John Bishop, Alan Blinder, Richard Burkhauser, Michael Darby, Irwin Garfinkel, Alan Gustman, Daniel Hamermesh, Martin Holmer, George Jakubson, Robert Lampman, Paul Menchik, Robert Moffitt, Michael Murray, Joseph Quinn, Timothy Smeeding, Eugene Smolensky, Barbara Wolfe and two anonymous referees.

PRICES AND QUANTITIES iS the brilliant and disturbing last work of Arthur M. Okun (1928-1980). For more than a decade Okun was the foremost practitioner of macroeconomics in the United States. His critical intelligence at both the theoretical and empirical ends of economics was unsurpassed. These facts were virtually a manufacturer's warranty that the book, whatever its argumentation and evidence, would be significant; we want to know what Okun thought. But this background was no guarantee of an important treatise, and it must have taken some courage to venture a big theoretical work, in an accessible style, on urgent questions. In fact, Okun has delivered a creative and virtuosic study in economic theory. The book's contribution is to provide a complete description of an economy in which rational economic agents consider the distributional consequences of wage and price decisions. The perspective adopted, one which is winning growing favor of late, is contract-theoretic. Because they wish to economize on their costly transactions with one another, people trade repeatedly with the same agent; so trust and fidelity to understandings are important. The ensuing analysis lodges some basic dissents from the informational-expectational paradigm developed over the last score of years. It is particularly stimulating, and troubling, on the main policy controversy of the decade, the question of disinflation

Each of 2 Universities-National Bureau of Economic Research Conferences on demographic economics held in 1958 and in 1976 resulted in a volume of essays with great significance for those working in demographic economics. Both are discussed for the 2 sets of essays do much to illustrate what the subdiscipline is doing and neglecting. The 1st dealt nominally with more developed countries and the 2nd purportedly with less developed countries. During the 1st period the dominant idea was neo-Malthusian with emphasis on demographic performance as a consequence of economic progress although in which direction (more children and sooner or fewer children and later) was in part a matter of choosing between the Becker/Mincer formulation of opportunity costs of parenthood and the Easterlin formulation of satisfaction with oneself or alternatively a fear that prosperity was effectively bounded. The book of the 2nd conference includes 9 essays plus a brief introduction by the editor. Each of these essays is reviewed briefly. What is most impressive about this volume are the preferences for the Iron Law of Wages/neo-Malthusian approach -- economic progress leads to demographic response and not the other way around

The impact that a firm's earnings releases have on the stock prices of other firms in its industry is examined. For an identifiable sub-set of firms, the results are consistent with a significant information transfer occurring between the earnings release firm and the other firms in its industry. This subset is identified by examining the impact of the release on the stock price of the announcing firm. The magnitude of this impact is more significant for a sample of firms which have a larger percentage of their revenues in the same line of business as the earnings release firm vis-á-vis a sample with a lower percentage of their revenues from the same line of business. Alternative interpretations of the empirical results are also discussed. The research findings have implications for information content and market efficiency research and for research on policy issues associated with disclosure regulation.

Regulators and small audit firms allege that audit firm size does not affect audit quality and therefore should be irrelevant in the selection of an auditor. Contrary to this view, the current paper argues that audit quality is not independent of audit firm size, even when auditors initially possesses identical technological capabilities. In particular, when incumbent auditors earn client-specific quasi-rents, auditors with a greater number of clients have ‘more to lose’ by failing to report a discovered breach in a particular client's records. This collateral aspect increases the audit quality supplied by larger audit firms. The implications for some recent recommendations of the AICPA Special Committee on Small and Medium Sized Firms are developed

Portfolios are formed directly and exclusively upon residual return behavior in the months prior to portfolio formation. The empirical behavior of residual return in the post-formation period is then examined. Based upon the overall time period studied (1932 through 1977), the average residual return is essentially zero in the months subsequent to the portfolio formation. However, systematic (i.e., non-zero) residual behavior is observed in particular years. Moreover, the results suggest the possibility that ‘abnormal’ returns observed after certain events (e.g., earnings announcements) may at least in part reflect more general phenomena associated with being ‘winners’ and ‘losers’ in terms of residual returns in the months previous to the event.