![]() Maybe Congress is lovin’ it, but we think the Economist needs to hold the mustard.Įditor’s Note: This post was originally published on the Council on Foreign Relations’s Geo-Graphics economics blog. This compares with an implausible 46 percent undervaluation on the Big Mac Index. Having been fairly valued at the beginning of last year, the renminbi - following on the heels of China’s large devaluation in August - is now 5 percent undervalued. As the Big Mac is more or less identical wherever it is sold, The Economist can compare prices between countries. The euro is undervalued by 11 percent, and the yen by 10 percent. The Big Mac Index (The Economist) Twice a year, the weekly magazine The Economist collects data on the price of a McDonald’s Big Mac in around 50 countries or monetary regions (including the euro area) around the world. Overall, the Mini Mac Index suggests that the dollar has become slightly more overvalued (up from 5 percent) since the beginning of 2015. This suggests it’s time to deep-fry their index and move over to ours. In January, the average overvaluation of the dollar according to the Big Mac Index was 26 percent - a Whopper. According to our Mini Mac Index, the average overvaluation was only 9 percent - small fries. dollars), to estimate the extent to which various. Burgernomics: A Big Mac Guide to Purchasing Power Parity Michael R. As can readily be seen in the graphic above, our Mini Mac Index shows that the law of one price holds far better than the Big Mac Index does - as it has done consistently over the past several years. The Economist magazine’s famous Big Mac Index uses the price of McDonald’s Big Macs around the world, expressed in a common currency (U.S. ![]()
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