THE CASE OF HONG KONG

Can Holidays Boost Consumption? The Case Of Hong Kong

Can Holidays Boost Consumption? The Case Of Hong Kong

According to the authors, Bala et al., (2008), the unemployment peaked to 7.8 percent in mid 2002, job security was reduced and dwelling cost was escalating. Wealth proceeded to shrink due to falling genuine asset standards (Hong Kong SAR Government, 2003:10). Despite some indications of financial recovery from 2004 onwards, household utilisation has stayed subdued.

Hong Kong's household finances has been through a roller coaster travel over the past decade. In early 2004, expanding the number of vacations as a scheme to increase household utilisation was mooted. In the article, “Can Holidays Boost Consumption? The Case Of Hong Kong“, the authors Bala et al., (2008) approximated the effect of vacations on personal household utilisation in Hong Kong. The authors did this by approximating both the long period and short-term utilisation functions. The authors Bala et al., (2008) approximates proposed that an added day vacation per quarter would boost personal utilisation expenditure (PCE) by HKD 213 on a per capita basis. Although an additional day vacation could add 0.34% to GDP, principle manufacturers should furthermore address the likely charges (e.g. cost of unproductive) of such a policy.

In 2005, personal utilisation expenditure (PCE) increased by 3.7 percent contrasted to a 7.3 percent development the preceding year (Hong Kong SAR Government, 2006:12). Furthermore, the reunification with China glimpsed an expanding number of Hong Kong inhabitants journeying over the boundary to shop, which farther decreased Hong Kong's household consumption.

The government was faced with the inquiry of how to refurbish the household utilisation in order that the finances could be boosted. Thus, granted such a scenario, it is not astonishing that the principle to boost the number of vacations might have been considered.

From a principle viewpoint, the implementation of additional vacations has to address both advantages as well as costs. Given the shortage of publications on vacations and financial principle, this note is a primary try at approximating the financial advantage of such a strategy. In specific, the target of this article was to address the effect of vacations on utilisation in Hong Kong by proposing a holiday- utilisation relationship. The authors, Bala et al., (2008), checked the suggested hypothesis by fitting an utilisation function for Hong Kong with the number of vacations as an added exogenous variable. Specifically, the authors Bala et al., (2008) assessed the boost in quarterly PCE as an outcome of an added vacation inside the quarter.

For public principle, the inquiry is if the added HKD 1.486 billion per quarter is a worthwhile utilisation increasing strategy. No question, from a psychological viewpoint, additional vacations are habitually met by the layman, ceteris paribus. However, from a macroeconomic viewpoint, one desires to contrast the boost in utilisation expenditure against the charges involved. The authors, Bala et al., (2008) approximated propose that an added vacation would boost PCE by 0.66%. Using the last quarter of 2005 as a benchmark, an additional day vacation would lift ...