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Reuse this content The Trust Project The best of our journalism, hand-picked each day Sign up to our free daily newsletter, The Economist today Sign up now Subscribe Group subscriptions Help Keep updated Facebook Instagram Twitter LinkedIn YouTube RSS Published since September 1843 to take part in a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress. You can also download the data or read the methodology behind the Big Mac index here. Read more about the Big Mac index in How big is Chinas economy Let the Big Mac decide. The relationship between prices and GDP per person may be a better guide to the current fair value of a currency. PPP signals where exchange rates should be heading in the long run, as a country like China gets richer, but it says little about todays equilibrium rate. 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.
2 FOR 5 BIG MAC 2017 PLUS
2 For Plus The Euroįor those who take their fast food more seriously, we also calculate a gourmet version of the index for 55 countries plus the euro area. Yet the Big Mac index has become a global standard, included in several economic textbooks and the subject of dozens of academic studies. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries.īurgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible.
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