Alberto F. Cavallo

Alberto F. Cavallo

Edgerley Family Associate Professor of Business Administration

Edgerley Family Associate Professor of Business Administration

Business, Government and the International Economy
+1 (617) 495-6099
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Alberto F. Cavallo
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Alberto Cavallo is the Edgerley Family Associate Professor 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 20 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
What Can Stockouts Tell Us about Inflation? Evidence from Online Micro Data
NBER Working Paper 29209
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.
Inflation with Covid Consumption Baskets
NBER Working Paper No. 27352
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.

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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). 

Tariff Passthrough at the Border and at the Store: Evidence from U.S. Trade Policy
American Economic Review: Insights, Vol 3 Issue 1. March 2021
We use micro data collected at the border and the store to characterize the price impact of recent US trade policy on importers, exporters, and consumers. At the border, import tariff passthrough is much higher than exchange rate passthrough. Chinese exporters did not lower their dollar prices by much, despite the recent appreciation of the dollar. By contrast, US exporters significantly lowered prices affected by foreign retaliatory tariffs. In US stores, the price impact is more limited, suggesting that retail margins have fallen. Our results imply that, so far, the tariffs' incidence has fallen in large part on US firms.

This work has been mentioned in The New York Times, The Wall Street Journal, The Financial Times, IMF Blog, BBC News, HBS Working Knowledge, CNN (Jake Tapper's State of the Union), Forbes, The Wall Street Journal (2), and the Washington Post.  
More Amazon Effects: Online Competition and Pricing Behaviors
Jackson Hole Economic Symposium Conference Proceedings (Federal Reserve Bank of Kansas City) - 2018

I study how online competition, with its algorithmic pricing technologies and the transparency of the Internet, can change the pricing behavior of large retailers and affect aggregate inflation dynamics. In particular, I show that online competition has raised both the frequency of price changes and the degree of uniform pricing across locations in the U.S. over the past 10 years. These changes make retail prices more sensitive to aggregate nationwide shocks, increasing the pass-through of both gas prices and nominal exchange rate fluctuations.

This work has been featured in The Economist, Financial Times, The Wall Street Journal, The New York Times, HBS Working Knowledge, and Bloomberg.

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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.
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