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Are hamburgers harmless?: the Big Mac Index in the twenty-first century

Research output: Working paper

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Are hamburgers harmless? the Big Mac Index in the twenty-first century. / Soo, Kwok Tong.
Lancaster: Lancaster University, Department of Economics, 2016.

Research output: Working paper

Harvard

Soo, KT 2016 'Are hamburgers harmless? the Big Mac Index in the twenty-first century' Lancaster University, Department of Economics, Lancaster.

APA

Soo, K. T. (2016). Are hamburgers harmless? the Big Mac Index in the twenty-first century. Lancaster University, Department of Economics.

Vancouver

Soo KT. Are hamburgers harmless? the Big Mac Index in the twenty-first century. Lancaster: Lancaster University, Department of Economics. 2016 Sept.

Author

Soo, Kwok Tong. / Are hamburgers harmless? the Big Mac Index in the twenty-first century. Lancaster : Lancaster University, Department of Economics, 2016.

Bibtex

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title = "Are hamburgers harmless?: the Big Mac Index in the twenty-first century",
abstract = "We make use of The Economist{\textquoteright}s Big Mac Index (BMI) to investigate the Law of One Price (LOP) and whether the BMI can be used to predict future exchange rate and price changes. Deviations from Big Mac parity decay quickly, in approximately 1 year. The BMI is a better predictor of relative price changes than of exchange rate changes, and performs best when predicting a depreciation of a currency relative to the US dollar. Convergence to Big Mac parity occurs more rapidly for currencies with some form of exchange rate control than for freely floating exchange rates, which is the opposite of what we obtain using the aggregate CPI.",
keywords = "Purchasing power parity, Big Mac index, panel data",
author = "Soo, {Kwok Tong}",
year = "2016",
month = sep,
language = "English",
publisher = "Lancaster University, Department of Economics",
type = "WorkingPaper",
institution = "Lancaster University, Department of Economics",

}

RIS

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T1 - Are hamburgers harmless?

T2 - the Big Mac Index in the twenty-first century

AU - Soo, Kwok Tong

PY - 2016/9

Y1 - 2016/9

N2 - We make use of The Economist’s Big Mac Index (BMI) to investigate the Law of One Price (LOP) and whether the BMI can be used to predict future exchange rate and price changes. Deviations from Big Mac parity decay quickly, in approximately 1 year. The BMI is a better predictor of relative price changes than of exchange rate changes, and performs best when predicting a depreciation of a currency relative to the US dollar. Convergence to Big Mac parity occurs more rapidly for currencies with some form of exchange rate control than for freely floating exchange rates, which is the opposite of what we obtain using the aggregate CPI.

AB - We make use of The Economist’s Big Mac Index (BMI) to investigate the Law of One Price (LOP) and whether the BMI can be used to predict future exchange rate and price changes. Deviations from Big Mac parity decay quickly, in approximately 1 year. The BMI is a better predictor of relative price changes than of exchange rate changes, and performs best when predicting a depreciation of a currency relative to the US dollar. Convergence to Big Mac parity occurs more rapidly for currencies with some form of exchange rate control than for freely floating exchange rates, which is the opposite of what we obtain using the aggregate CPI.

KW - Purchasing power parity

KW - Big Mac index

KW - panel data

M3 - Working paper

BT - Are hamburgers harmless?

PB - Lancaster University, Department of Economics

CY - Lancaster

ER -