Governments often regulate industries using policies which fail to account for inflation. Examples include the minimum wage, fuel taxes, and the alternative minimum tax. In a recent working paper (Inflation, Taxation & Market Power), we show that failing to index alcohol taxes kept retail prices low while substantially increasing federal and state tax revenue (and firm profits). Increased alcohol consumption from nominal taxation also increased prevalence of alcohol-attributable diseases such as cancer, cirrhosis, and heart disease, especially among low income, minority, and rural residents as these consumers tend to be more price-sensitive. We find that firms’ strategic pricing amplified cost changes along the supply chain which indicates that market power is an important feature towards understanding and predicting inflation.
About Me:
I am an Assistant Professor of Economics at the University of Georgia. The focus of my research is estimating the effects of industrial policy, particularly the strategic responses of firms. My research appears in top journals, including Econometrica, AEJ: Microeconomics, and The RAND Journal of Economics. I teach industrial organization, data science, and causal machine learning (CausalML) and hold a PhD in Economics from the University of Texas at Austin.
