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
 
Alberto F. Cavallo
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(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, a co-director of the Pricing Lab at the D3 Institute at Harvard.

Cavallo's research focuses on inflation. In particular, he studies 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
Tracking the Short-Run Price Impact of U.S. Tariffs
This paper examines the short-run impact of the 2025 U.S. tariffs on consumer prices using a unique integration of high-frequency retail pricing data, product-level country-of-origin information, and detailed tariff classifications. By linking daily prices from major U.S. retailers to Harmonized System (HS) codes and import origins, we construct custom price indices that isolate the direct effects of tariff changes across product categories and trading partners. Our analysis reveals rapid pricing responses, though their magnitude remains modest relative to the announced tariff rates and varies by country of origin. Both imported and domestic goods are affected, suggesting broader pricing and supply chain spillovers. These findings offer timely evidence for policymakers, businesses, and consumers navigating the immediate consequences of trade policy changes.

SEE THE TARIFF TRACKER
Markups and Cost Passthrough Along the Supply Chain
Harvard Business School Working Paper, No. 25-009
We study markups and pricing strategies along the supply chain. Our unique dataset combines detailed price and cost information from a large global manufacturer with matched retail prices collected online for the period July 2018 through June 2023. We show that total markups—reflecting the difference between retail prices and production costs—are stable over time, despite the inflationary period at the end of the sample. Along the supply chain, manufacturer and retail markups are negatively correlated. For the most part, we find similar patterns across countries, though there is substantial heterogeneity in the split of markups between the manufacturer and retailers. We propose a model of supply chain pricing behavior that rationalizes key patterns in our data, and we use the model to quantify factors that determine relative bargaining power between the manufacturer and retailers. Finally, we consider the dynamics of cost pass-through. The manufacturer adjusts prices in response to cost shocks more quickly than retailers and appears to more fully incorporate idiosyncratic cost shocks to specific products. Differential pass-through patterns along the supply chain can arise from bargaining power that adjusts dynamically in response to shocks.
Price Discounts and Cheapflation During the Post-Pandemic Inflation Surge
Journal of Monetary Economics 148 (November 2024).

We study how within-store price variation changes with inflation, and whether households exploit it to attenuate the inflation burden. We use micro price data for food products sold by 91 large multi-channel retailers in ten countries between 2018 and 2024. Measuring unit prices within narrowly defined product categories, we analyze two key sources of variation in prices within a store: temporary price discounts and differences across similar products. Price changes associated with discounts grew at a much lower average rate than regular prices, helping to mitigate the inflation burden. By contrast, cheapflation—a faster rise in prices of cheaper goods relative to prices of more expensive varieties of the same good—exacerbated it. Using Canadian Homescan Panel Data, we estimate that spending on discounts reduced the change in the average unit price by 4.1 percentage points, but expenditure switching to cheaper brands raised it by 2.8 percentage points.

 This work has been mentioned in Financial Times, NPR, Le Devoir, Charts: HBS Working Knowledge
Large Shocks Travel Fast
American Economic Review: Insights 6, no. 4 (December 2024)
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.
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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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