Alberto F. Cavallo

Alberto F. Cavallo

Thomas S. Murphy Professor of Business Administration

Thomas S. Murphy Professor of Business Administration

Business, Government and the International Economy
+1 (617) 495-6099
Send Email
 
Alberto F. Cavallo
Unit
Contact Information
(617) 495-6099
Featured Work Publications Awards & Honors

Alberto Cavallo is the Thomas S. Murphy Professor of Business Administration at Harvard Business School, where he teaches in the Business, Government, and the International Economy (BGIE) unit, a Faculty Research Fellow at the National Bureau of Economic Research, and a member of the Technical Advisory Committee of the US Bureau of Labor Statistics (BLS).

Cavallo's research focuses on the behavior of prices and its implications for macroeconomic measurement, models and policies. He pioneered the use of online data to measure inflation and conduct research on high-frequency pricing dynamics during his Ph.D. at Harvard. He created Inflacion Verdadera in 2007 to measure the real inflation rate in Argentina and co-founded The Billion Prices Project in 2008 to expand the measurement of online inflation globally. He also co-founded PriceStats in 2011, the leading private source of inflation and PPP statistics in over 25 countries.

Cavallo earned a Bachelor of Science in Economics with summa cum laude from the Universidad of San Andres in Buenos Aires in 2000. In 2005, he earned a Masters in Business Administration from MIT, and in 2010 he earned a PhD in Economics from Harvard University.  He lives in Cambridge with his wife and two sons.

Featured Work
Large Shocks Travel Fast
NBER Working Paper 31659
We leverage the inflation upswing of 2022 and various granular datasets to identify robust price-setting patterns following a large supply shock. We show that the frequency of price changes increases dramatically after a large shock. We set up a parsimonious New Keynesian model and calibrate it to fit the steady-state data before the shock. The model features a significant component of state-dependent decisions, implying that large cost shocks incite firms to react more swiftly than usual, resulting in a rapid pass-through to prices--large shocks travel fast. Understanding this feature is crucial for interpreting recent inflation dynamics.
The International Price of Remote Work
NBER Working Paper 29437
We use data from a large web-based job platform to study how the price of remote work is determined in a globalized labor market. In the platform, workers located around the world compete for jobs that can be done remotely. We document that, despite the global nature of the marketplace, the worker's country accounts for almost a third of the variance in remote wages. The observed wage differences are strongly correlated to the GDP per capita in the worker's location. This correlation is not accounted for by differences in workers' observable characteristics, occupations, or differences in the employers' locations. Instead, data on wage-histories indicate that remote wages are partly determined by the conditions that workers face in their local labor markets. We also document that, as with internationally traded goods, remote wages expressed in local currency move strongly with the dollar exchange rate of the worker's country, and are highly sensitive to changes in the wages of foreign competitors.
What Can Stockouts Tell Us about Inflation? Evidence from Online Micro Data
Journal of International Economics (forthcoming)
We use a detailed micro dataset on product availability to construct a direct high-frequency measure of consumer product shortages during the 2020--2022 pandemic. We document a widespread multi-fold rise in shortages in nearly all sectors early in the pandemic. Over time, the composition of shortages evolved from many temporary stockouts to mostly discontinued products, concentrated in fewer sectors. We show that unexpected product shortages have significant inflationary effects within three months. These effects are larger and more persistent for imported goods and import-intensive sectors. We develop a model of inventories in a sector facing both demand and cost disturbances, and use the observed joint dynamics of stockouts and prices to show that these effects can be associated with elevated costs of replenishing inventories and higher exposure to trade.

This work has been mentioned in PBS NewsHour, MarketWatch 
Inflation with Covid Consumption Baskets
IMF Economic Review (forthcoming)
The Covid-19 Pandemic led to changes in expenditure patterns that can introduce significant bias in the measurement of Consumer Price Index (CPI) inflation. Using publicly-available data on card transactions, I update the official CPI weights and re-calculate inflation with Covid consumption baskets. I find that the US CPI underestimated the Covid inflation rate, as consumers spent relatively more on food with positive inflation, and less on transportation and categories experiencing deflation. The bias peaked in  May, when US Covid annual inflation was 0.95% compared to just 0.13% in the CPI and low-income households were experiencing nearly twice as much inflation as those at the top of the income distribution. I find similar evidence of higher Covid inflation in 12 of 19 additional countries.

UPDATED GRAPHS AND DATA DOWNLOADS

This work has been mentioned in The New York Times, Bloomberg, Quartz, Financial Times, Financial Times II, Reuters, Washington Post, Folha de S Paolo, NPR, TIME, Bloomberg II,The Economist, The Wall Street Journal, The Economist II, The New York Times (opinion). 

Published Papers
Working Papers
Case and Teaching Materials
Awards & Honors
Received a National Science Foundation Trans-Atlantic Platform-Digging into Data Grant, 2017–2019.
Received a National Bureau of Economic Research (NBER) Economics of Digitization Grant, 2015–2016.
Awarded the 2015 Roger F. Murray Prize from the Institute of Quantitative Finance.
Named Douglas Drane Career Development Chair in Information Technology and Management at MIT Sloan School of Management, 2015–2018.
Received a 3M Junior Faculty Grant from MIT Sloan School of Management, 2014–2016.
Named the Cecil and Ida Green Career Development Chair, MIT Sloan School of Management, 2012–2015.
Named BusinessWeek Innovator, February 2011.
Received a JFRAP Grant, MIT Sloan School of Management, 2011–2018.
Research selected for inclusion in the New York Times 10th Annual Year in Ideas Issue, 2010.
Received a Dissertation Completion Fellowship, Harvard University, 2009–2010.
Received the C.V. Starr Scholarship, Harvard University, 2009-2010.
Received a Real Estate Academic Initiative Grant, Harvard University, 2009.
Received a Warburg Funds Grant, Harvard University, Spring 2008–2009.
Received a Derek C. Bok Award for Excellence in Graduate Student Teaching of Undergraduates, Harvard University, Spring 2008.
Received a Derek C. Bok Award for Excellence in Graduate Student Teaching of Undergraduates, Harvard University, Fall 2007.
Additional Information
Research Projects
Links
Teaching Links and Materials
Areas of Interest
In The News

In The News

More News for Alberto F. Cavallo
Additional Information

Research Projects

 More
 Less

Links

Teaching Links and Materials

Areas of Interest

In The News

More News for Alberto F. Cavallo