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четверг, 5 ноября 2020 г.

The Big Mac index

 

Global price of a Big Mac as of July 2020, by country

Global exchange rates, to go

How it works

Purchasing-power parity implies that exchange rates are determined by the value of goods that currencies can buy

Differences in local prices – in our case, for Big Macs – can suggest what the exchange rate should be

Using burgernomics, we can estimate how much one currency is under- or over-valued relative to another

GDP-adjusted
Varying labour costs and barriers to migration and trade may undermine purchasing-power parity
To control for this, our adjusted index predicts what Big Mac prices should be given a country’s GDP per person
The difference between the predicted and the market price is an alternative measure of currency valuation

Source data

Our source data are from several places. Big Mac prices are from McDonald’s directly and from reporting around the world; exchange rates are from Thomson Reuters; GDP and population data used to calculate the euro area averages are from Eurostat and GDP per person data are from the IMF World Economic Outlook reports.

The GDP-adjusted index addresses the criticism that you would expect average burger prices to be cheaper in poor countries than in rich ones because labour costs are lower. PPP signals where exchange rates should be heading in the long run, as a country like China gets richer, but it says little about today's equilibrium rate. The relationship between prices and GDP per person may be a better guide to the current fair value of a currency.

https://econ.st/38lZHdT