Faculty & Research
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 started 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 an 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 2020-2021 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 product shortages have significant but transitory inflationary effects, and that these effects can be associated with elevated cost of replenishing inventories.
Inflation with Covid Consumption Baskets
NBER Working Paper No. 27352
The Covid-19 Pandemic has led to changes in expenditure patterns that can introduce significant bias in the measurement of Consumer Price Index (CPI) inflation. I use publicly-available data on credit and debit card transactions to update the official CPI weights and re-calculate inflation with Covid consumption baskets. I find that the US CPI underestimated the Covid inflation rate, particularly during the first three months of the Pandemic, as consumers spent relatively more on food and categories with higher inflation, and less on transportation and other categories experiencing deflation. By September, US Covid inflation was 1.90% compared to 1.41% in the official CPI, and was impacting low-income households the most. I also find evidence of higher Covid inflation in 12 out 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

 

 
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.

Are Online and Offline Prices Similar? Evidence from Large Multi-Channel Retailers
American Economic Review - 107, no. 1 (January 2017): 283–303

Online prices are increasingly used for measurement and research applications, yet little is known about their relation to prices in physical stores, where most retail transactions occur. I conduct the first large-scale comparison of prices simultaneously collected from the websites and physical stores of 56 large multi-channel retailers in 10 countries. I find that price levels are identical about 72 percent of the time. Price changes are not synchronized but have similar frequencies and average sizes. These results have implications for national statistical offices, researchers using online data, and anyone interested in the effect of the Internet on retail prices.


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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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