Sticky price monetary models of exchange rates, while reasonable theoretically, have been disappointing empirically. Out-of-sample predictions have been little or no better than those from a naive model of no change. The most likely reason is that shocks to the market's expectation of the future...

This paper finds that consumer attitudes, as reflected in surveys of consumer sentiment, have a significant influence on household purchases of durable goods. Normally, consumer sentiment moves with current economic conditions and bears a stable relationship to a few economic variables. At times...