econgirl
  • Home
  • blog
  • Recipes
  • Links
  • Liz's 15 Minute Guides

BLOG

Everyone gets their Christmas Bonus somehow

1/4/2016

2 Comments

 
In Guyana, salaried employees traditionally receive a 13th month bonus-- the equivalent of one month's salary, paid as a bonus at the end of the calendar year. 

This bonus, combined with the rush to buy gifts and traditional holiday foods, creates a surge in demand which I'm told pushes prices in the market up in the days before Christmas. Eggs in particular have a reputation for becoming outlandishly expensive. 

I decided to see if the anecdotes shared by my colleagues were reflected in price data. They weren't. There is no seasonal uptick in Guyana's consumer price index in December. (There is some macro evidence of the bonuses: currency in circulation spikes in January.) 

Assuming my colleagues' stories of spiking market prices are correct, why is there no increase in the CPI in December? I can think of several reasons.
  • First, not all vendors may raise prices. While many market sellers likely do, I saw no increase in the prices at the small supermarkets where I do most of my shopping. It is likely more costly for modern-style supermarkets to temporarily raise prices, both in terms of "menu costs" and customer loyalty. 
  • Second, how much prices rise may vary by product, depending on the price elasticity of demand. The high demand at Christmas is predictable, so in theory, many suppliers could increase their stock without much increase in per unit cost. This might not be the case for locally produced perishable items like eggs, however. Chickens are unlikely to step up their laying in anticipation of Christmas baking needs. For these items, extra demand can have a dramatic effect on price. 
  • Lastly, CPI statistics may simply not capture the temporary price spike. CPI data are based on weekly surveys of five markets, and monthly surveys of another 110 outlets such as supermarkets and gas stations. The monthly surveys are conducted on the 15th, so the price surge in the days before Christmas would not be picked up. The weekly surveys might capture it, though it depends on their timing. 
Despite my colleagues' warnings, I found myself running around on Christmas Eve doing last-minute shopping. None of the stores I visited seemed to have inflated pricing, and the only market purchase I made was a few vegetables from my regular vegetable lady, who charged me the normal prices. I did have one taxi driver who asked for twice the regular fare. There was a long line of empty taxis waiting for passengers, so I didn't have much trouble negotiating down to 150 percent of the normal price. I decided to give the driver a hard time, supply-sider style.  "I know that fuel prices are the same today as every other day. So why are taxis more expensive?" He laughed. "Everyone has to get there Christmas bonus somehow!" 

I didn't tell him that I'd paid all my taxis extra that day, even the ones who'd asked the regular price, even though there didn't seem to be a shortage of taxis. Maybe for a short time during the holidays, the market just doesn't clear. Or maybe we pay a little extra, and we buy a little extra holiday cheer. 
2 Comments
college paper link
1/13/2016 01:28:31 pm

It's a good news! I am sure it is always pleasant to get presents! Thanks a lot for this information and I am sure that your paper writer will share more posts soon

Reply
language translation service link
1/12/2018 06:41:30 am

Christmas is extremely hard time in all the countries who celebrate it. Our shops raise the prices all the time. An though we don't have a 13th salary bonus. I just get used to it. I try to buy earlier. A month earlier.

Reply



Leave a Reply.

    About Liz

    I have worked in economic policy and research in Washington, D.C. and Ghana. My husband and I recently moved to Guyana, where I am working for the Ministry of Finance. I like riding motorcycle, outdoor sports, foreign currencies, capybaras, and having opinions. 

    Archives

    December 2016
    November 2016
    July 2016
    February 2016
    January 2016
    December 2015
    November 2015
    March 2013
    February 2013
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    March 2012
    February 2012
    January 2012
    November 2011
    October 2011
    September 2011
    August 2011
    July 2011
    June 2011
    May 2011
    April 2011
    March 2011
    February 2011
    January 2011
    October 2010
    August 2010
    July 2010
    May 2010
    April 2010
    March 2010
    February 2010
    January 2010
    December 2009
    November 2009
    October 2009
    September 2009
    February 2009
    January 2009

    Categories

    All
    Auto Industry
    Behavioral Economics
    Budget
    China
    Conflict
    Corruption
    Crime
    Currency
    Development
    Dollar
    Economic Data
    Economists
    Environment
    Fashion
    Federal Reserve
    Finance
    Food
    Gender
    Ghana
    Haiti
    Health Care
    India
    Inflation
    Microeconomics
    Money
    Politics
    Poverty
    Race
    Rcts
    Reading Recommendations
    Regulation
    Religion
    Sports
    Stimulus
    Survey
    Taxes
    Technology
    Trade
    Travel
    Viewing Recommendations

    RSS Feed

Powered by Create your own unique website with customizable templates.
  • Home
  • blog
  • Recipes
  • Links
  • Liz's 15 Minute Guides