Published Work

Abstract: How have profits behaved in the current period of sustained inflation? In part, the answer depends on how ‘profits’ are defined. Some broad measures suggest increasing profits, but conflate market and non-market sector dynamics and omit important corporate costs. This paper constructs an alternative measure of corporate profits to capture UK firm earnings in excess of all production costs. This measure has been declining since the start of 2022, consistent with evidence from historical energy shocks. This decline has not been uniform across firms, however: firms with higher market power have been better able to protect their margins; others have experienced large declines.

(with Lena Anayi, Nicholas Bloom, Philip Bunn, Paul Mizen, Özgen Öztürk, and Gregory Thwaites)

AEA Papers & Proceedings 113: 56-60, May 2023

NBER Working Paper (updated with data up to April 2023)

Abstract: We introduce a new measure of own-price inflation uncertainty using firm-level data from a large and representative survey of UK businesses. Inflation uncertainty increased significantly from the start of 2021 and reached a peak in the second half of 2022, even as a similar measure of sales uncertainty declined. We also find large cross-sectional differences in inflation uncertainty, with uncertainty particularly elevated for smaller firms and those in the goods sector. Finally, we show that firms which are more uncertain about their own price expectations experience higher forecast errors 12 months later. These findings suggest that studying inflation uncertainty at the firm level may be an important new dimension to understanding firm performance.

(with Sascha O. Becker and Sharun Mukand)

Explorations in Economic History 86, 101471, October 2022

Abstract: Persecution, pogroms, and genocide have plagued humanity for centuries, costing millions of lives and haunting survivors. Economists and economic historians have recently made new contributions to the understanding of these phenomena. We provide a novel conceptual framework which highlights the inter-relationship between the intensity of persecution and migration patterns across dozens of historical episodes. Using this framework as a lens, we survey the growing literature on the causes and consequences of persecution, pogroms, and genocide. Finally, we discuss gaps in the literature and take several tentative steps towards explaining the differences in survival rates of European Jews in the 20th century.

Working Papers

Abstract: This paper documents that surprise election outcomes - measured as deviations between realised vote shares and expected vote shares based on a newly constructed dataset of opinion polls and party and candidate vote shares close to election day - are causing non-negligible short-term contractions in economic activity. We find that, on average, a percentage point higher surprise is associated with a 0.37 percentage point lower year-on-year growth rate one year after the election. These effects are only present in countries with strong democracies and seem to operate mainly through increased economic policy uncertainty and lower investment growth over a window of up to eight quarters after an election. In addition, surprise performances of left-wing political parties and in elections with transitions to left-wing governments are associated with the largest effects on the economy.

(with Philip Bunn, Lena Anayi, Nicholas Bloom, Paul Mizen, and Gregory Thwaites)

NBER Working Paper, September 2022

VoxEU column

Abstract: We use data from a large panel survey of UK firms to analyze the economic drivers of price setting since the start of the Covid pandemic. Inflation responded asymmetrically to movements in demand. This helps to explain why inflation did not fall much during the negative initial pandemic demand shock. Energy prices and shortages of labor and materials account for most of the rise during the rebound. Inflation rates across firms have become more dispersed and skewed since the start of the pandemic. We find that average price inflation is positively correlated with the dispersion and skewness of the distribution. Finally, we also introduce a novel measure of subjective inflation uncertainty within firms and show how this has increased during the pandemic, continuing to rise in 2022 even as sales uncertainty dropped back.

Abstract: We explore the effect of oil import price shocks on political outcomes using a worldwide dataset on elections of chief executives. Oil import price shocks cause a reduction in the odds of reelection of incumbents, an increase in media chatter about fuel prices, and an increase in non-violent protests. These results are present in democracies but absent in autocracies. To explain the dichotomy, we show that the pass-through from international to domestic fuel prices is limited in autocracies with adverse consequences on levels of debt and international reserves. The results point to the interdependence of goods markets and politics.

Work in Progress

The Impact of Aggregate Inflation on Firm Expectations

(with Nicholas Bloom, Philip Bunn, Paul Mizen, and Gregory Thwaites)

Firm climate investments: Evidence from the UK

(with Prachi Srivastava)

Intertemporal pass-through

(with Mishel Ghassibe and Boromeus Wanengkirtyo)

Rescuing the Hopeless

(with Sascha O. Becker and Sharun Mukand)

Skill Traps and Regional Divergence

(with Raghav Malhotra)

Reform Chatter and Democracy

(with Rabah Arezki, Simeon Djankov, and Ha Nguyen)