Working Paper

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.