Working Paper

Electoral timing coordination represents a fundamental institutional choice with potentially significant macroeconomic consequences, yet systematic evidence remains limited. This paper exploits variation in India's multi-level electoral system to identify causal effects of synchronized elections on economic growth. Our findings can inform ongoing debates about India's proposed electoral reforms, and are also relevant for broader international debates on political economy determinants of growth in emerging markets and benefits from political unions, specifically, in the case of Europe.

Why did US inflation rise over 2021-22 and why has it retreated since then? Ball, Leigh, and Mishra (2022), writing near the inflation peak, explained the rise with a framework in which inflation depends on three factors: long-term expectations; the tightness of the labor market as measured by the vacancy-to-unemployment (V/U) ratio; and large changes in relative prices in particular industries such as energy and autos. This paper finds that the same framework explains the retreat in inflation since our earlier work.

This paper analyzes inflation dynamics in 21 advanced and emerging market economies since 2020. We decompose inflation into core inflation as measured by the weighted median inflation rate, and headline shocks––deviations of headline inflation from core. Headline shocks occurred largely on account of energy price changes, although food price changes and indicators of supply chain problems also played a role. We explain the evolution of core inflation with two factors: the strength of macroeconomic conditions—measured by the unemployment gap, the output gap, and the ratio of job vacancies to unemployment—and the pass-through into core inflation from past headline shocks. We conclude that the international rise and fall of inflation since 2020 largely reflected the direct and pass-through effects of headline shocks. Macroeconomic conditions generally played a secondary role. In the United States, estimated price pressures from strong macroeconomic conditions had been greater than in other economies but have eased.

This paper examines the effects of an alcohol prohibition law in Bihar, India, on intoxicant consumption. We implement a dynamic difference-in-difference estimation strategy using longitudinal data on monthly household expenses, exploiting state-level variation in policy exposure and household-level variation in alcohol use. We document that alcohol- consuming households in Bihar reduced their spending on tobacco products following the ban announcement, indicating complementarity between alcohol and other intoxicants; however, after its strict enforcement, when alcohol was unavailable, these households gradually increased their tobacco consumption. We find reallocation in healthcare spending: urgent medical expenses decrease with increased spending towards positive lifestyle changes.

U.S. inflation surged in 2021-22 and has since declined, driven largely by a sharp drop in goods inflation, though services inflation remains elevated. This paper zooms into services inflation, using proprietary microdata on wages to examine its relation-ship with service sector wage growth at the Metropolitan Statistical Area (MSA) level. We estimate the wage-price pass-through with a local projection instrumental variable model that exploits variation in labor market tightness across MSAs. Our findings re-veal a positive and significant relationship between wages and price growth, with a lag. This suggests that the effects of tight labor markets are persistent and may influence the pace of progression toward the inflation target.

The share of e-commerce in total credit-card spending boomed during Covid in Spain. In particular, women, youth, and urban consumers used e-commerce proportionally more during the pandemic, especially for services. Using a unique proprietary dataset on credit card transactions, we test conjectures about consumers’ behavior (based on fear, hoarding, or learning) during Covid. Overall, ecommerce share reverted to its pre-Covid trend as the pandemic waned. However, some consumers with lower pre-Covid ecommerce usage tend to permanently use more e-commerce, supporting the conjecture of “learning by locking” for these individuals.