Economics @ ITT

Big Mac Index as a Proxy for Purchasing Price Parity

Posted in economics, International Economics, macroeconomics by ittecon on April 23, 2010

Purchasing Price Parity is an economic concept that allows us to compare across differently scaled economies. One way this is implemented is by a Big Mac Index, wherein parity is assessed by the price of a Big Mac in the countries being compared. One can even see how these countries change over time relative to each other.

A shorter video explanation can be found here. One can also see how long it takes to earn enough to buy a Big Mac in various countries to get a sense of local purchasing power.


One Response

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  1. Igor said, on May 9, 2010 at 8:25 pm

    Cool because there is website that actually does these currency conversions using the big mac index.

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