Monday, April 24, 2006

A mock to International Economics?: The Big Mac Index

The Big Mac Index is, probably, one of the most creative economic indicators ever proposed. Although it has not been officially recognized as an economic index, it is an interesting way to compare the economic situation between two or more countries.
Its method consists of comparing the price of a standard Big Mac hamburger in two different countries (or more, depending on the number of countries that are subject to the evaluation) on the same date, in order to evaluate the living costs in each country and to know if the local currency is over valued or under valued.
This index was first proposed by The Econimist Newspaper on September, 1986, and although it is quite unexact because of social issues and ways of thinking, it gives a good idea about the different costs of living that are found in several countries.
Some other methods have been proposed lately, such as comparing the cost of a tall regular coffe at international Starbucks shops, or the cost of the Coca Cola. I think that those are only copies of the original method: The Big Mac Index.
So, next time you're having a Big Mac, think about the powerful economic tool that you're holding in your hands!!! Hehehe...


At 3:43 AM , Anonymous Roulette Odds said...

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