My friend, Dennis Duitch (www.duitchconsulting.com) thought it might be really useful if we understood a bit more about what American buying power is when compared with the buying power in other countries. The sophisticated measuring device? A Big Mac! This is a short blog, but hey… Here’s an excerpt from his latest RSS feed.
THE ‘BIG MAC INDEX’ is theoretically a guide to valuing foreign currencies based on their purchasing power, since the exchange rate between countries should (theoretically) be equalized with reference to a clearly common denominator. However, the disparity of currency ‘purchase power parity’ in today’s upside-down economies is demonstrated by the range of prices for one Big Mac burger, when measured in U.S. dollars. In America, average cost is $3.57; in Norway – $6.15; Europe - $4.62; Peru - $2.66; Mexico - $2.39; Russia - $2.04; China $1.83; and Hong Kong $1.72.
So much for getting a PhD in economics! It’s just lunch!
I’m Peter Dekom, and Dennis Duitch approves this message.
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