Burgernomics

Burgernomics - Burgernomics When the chips are down The...

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Burgernomics When the chips are down The latest Big Mac index suggests the euro is still overvalued Jul 22nd 2010
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Correction : Burger-lovers in Argentina were enjoying a special discount on Big Macs when we collected data for our index (July 24th 2010). At normal prices the peso is undervalued by 5% not 52%. Sorry for the whopper. This has been corrected online. ASK Western policymakers how they intend to squeeze growth from their sluggish economies and most pin their hopes on higher exports. That makes exchange rates an especially sensitive topic. A weaker currency improves the competitiveness of a country by making exports cheaper. It also encourages domestic consumers to switch from expensive imports to domestic goods. The Economist ’s exchange-rate scorecard, the Big Mac index, shows that currencies continue to be cheap in the developing world but overvalued in Europe. 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
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This note was uploaded on 04/26/2011 for the course ECON 102 taught by Professor Soffriti during the Spring '08 term at BU.

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Burgernomics - Burgernomics When the chips are down The...

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