Here's what economists and central bankers would make of Christmas

Lombard Street Research's daily note has taken a turn for festive today.

Below is their (excellent) guide to the macroeconomics of Christmas.

The Schools


Place a lot of emphasis on the "macro stabilisation" properties of Christmas. Ideally, they would vary the number of Christmases each year according to the state of the economy.

This is best summarised by Paul Krugman's depression paper "Wish it could be Christmas every day", in which he also acknowledges his love of British glam rock.

The Keynesians would like to see a larger role for the state, including publically-funded Santas.


Believe Christmas is dangerous because it inevitably ends with a nasty January hangover.

Also worry about the moral hazard implications of gift-giving and the propensity for overinvestment in Christmas decorations.

Reject the ida of "public" holidays, arguing the free market would lead to a better outcome.


Convinced they are the only ones who know how Christmas "really works" and quickly become frustrated with other economists' lack of understanding.

Their thinking can be reduced to a simple identity, though this is vulnerable to shifts in the velocity of Santa's circulation.

Hardcore monetarists believe in the tight control of chocolate coins to prevent the hyper-inflaton of waist lines and the hyper-activity of small children.

Chicago School

Argue Christmas has no meaningful impact because gift-giving nets out. Fully rational individuals will anticipate this and adjust their behaviour accordingly.


Busy thinking up ways to "smooth out" Christmas. They would like to "lean against" the festive season, perhaps by tightening credit and raising alcohol prices in mid-November and reversing these policies in early January.

Some hardliners would like to introduce quantitative controls on Santa's toy factory.

Secular Stagnationists

Claim Christmas hasn't been as much fun since the mid-1990s, but can't really explain why. Perhaps it has something to do with the music.

The Central Banks

The Federal Reserve

Big fans of Christmas and even have their own Santa lookalikey (though, unlike the real Mr C, he is set to retire soon).

Becoming frustrated that Santa's sleigh isn't one of their real policy tools and that they can only influence Christmas indirectly by giving presents to bankers and hoping they re-gift them to the rest of society.

The European Central Bank

Generally in favour of Christmas but have a small and powerful minority who believe gift-giving is immoral and must eventually lead to hyper-inflation.

President increasingly frustrated with this group's sobering impact on their annual Christmas party.

The Bank of England

Committed to enjoying Christmas on 25 December, subjects to several clearly specified caveats and "knock-out" factors.

Have produced a 24,000 page paper explaining how these work.

The Bank of Japan

Spent 20 years telling everyone Santa didn't exist and that Christmas was a waste of time.

Have now changed their minds, but seem to have a credibility problem.