Currency Valuation and Purchasing Power Parity

Jamal Ibrahim Haidar

World Bank

April 1, 2011

World Economics, Vol. 12, No. 3, 2011

This paper aims to highlight key limitations of “The Economist” magazine’s Big Mac Index (BMI). The Economist markets the BMI as a tool to determine valuation of currencies. This paper shows that the BMI is a misleading measure of currency valuation for economies whose markets are structurally different from the benchmark currency countries.

Number of Pages in PDF File: 13

Keywords: Big Mac Index, currency valuation, purchasing power parity, international and regional price differences, border effect, brand perception

JEL Classification: E2, E3, F1, F2, F3, F4, F15, F23, F41

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Date posted: June 15, 2011 ; Last revised: December 31, 2011

Suggested Citation

Haidar, Jamal Ibrahim, Currency Valuation and Purchasing Power Parity (April 1, 2011). World Economics, Vol. 12, No. 3, 2011. Available at SSRN: http://ssrn.com/abstract=1864343 or http://dx.doi.org/10.2139/ssrn.1864343

Contact Information

Jamal Ibrahim Haidar (Contact Author)
World Bank ( email )
1818 H Street, NW
Washington, DC 20433
United States
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