World Economics - Insight , Analysis and Data

World Economics - Insight , Analysis and Data
Currency Valuation and Purchasing Power Parity
Jamal Ibrahim Haidar
World Economics, September 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.


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