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Big Mac Index Suggests that Dollar is Undervalued with Europe/Overvalued with Asia
Old 07-27-2010, 05:10 PM   #1
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Big Mac Index Suggests that Dollar is Undervalued with Europe/Overvalued with Asia

The index is a lighthearted attempt to gauge how far currencies are from their fair value. It is based on the theory of purchasing-power parity (PPP), which argues that in the long run exchange rates should move to equalise the price of an identical basket of goods between two countries. Our basket consists of a single item, a Big Mac hamburger, produced in nearly 120 countries. The fair-value benchmark is the exchange rate that leaves burgers costing the same in America as elsewhere.


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Old 07-27-2010, 05:20 PM   #2
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The Canadian dollar is misrepresented here, how can it be a lousy 4%? My measly little one Canadian dollar can buy all the Big Macs I'll ever want and still give me C$1 in change.

There are two kinds of people in the world: those who can extrapolate conclusions from insufficient data and ..
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Old 07-27-2010, 07:08 PM   #3
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How strange that we are about at parity with Japan for a beef product?

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