Burgernomics is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries.
THE Big Mac index "invented" by The Economist in 1986 is a fun way of checking whether currencies are at their “correct” level and is a tool to make exchange-rate theory more digestible.
For the first time, they have included India in their survey. Since McDonald’s does not sell Big Macs here in India, The Economist has taken the price of a Maharaja Mac for its calculation. It indicates that the rupee is 53% undervalued and therefore the Implied PPP of the US dollar would be Rs 20.70 only.
THE Big Mac index "invented" by The Economist in 1986 is a fun way of checking whether currencies are at their “correct” level and is a tool to make exchange-rate theory more digestible.
For the first time, they have included India in their survey. Since McDonald’s does not sell Big Macs here in India, The Economist has taken the price of a Maharaja Mac for its calculation. It indicates that the rupee is 53% undervalued and therefore the Implied PPP of the US dollar would be Rs 20.70 only.
So Asia rocks if one wants a burger. Um that means the West has sluggish currencies na? what about the Euro? overvalued?
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