Reading-Economist - The Big Mac index

Reading-Economist - The Big Mac index - The Big Mac index...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
The Big Mac index Fast food for thought What do hamburgers, lipstick and men’s underwear have in common? The joys of quirky economic indicators Jul 30th 2011 | from the print edition IT IS nearly 25 years since The Economist cooked up the Big Mac index. We devised it in September 1986 as a fun way to explain “purchasing -power parity”, by comparing the prices of hamburgers in different countries. But burgernomics has since provided serious food for thought. Some economists think the Big Mac index has been surprisingly accurate in predicting long-run movements in exchange rates. It has also provided a few hot tips (and some half-baked ones) for investors. When the euro was launched in 1999, almost everybody reckoned it would immediately rise against the dollar. But the Big Mac index suggested that the euro was already overvalued. Soros Fund Management, a prominent
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
hedge fund, later told us that it sniffed at the sell smell coming from the Big Mac index, but resisted the temptation to bite. It was cheesed off when the
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

Reading-Economist - The Big Mac index - The Big Mac index...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online