A relative measure of how overvalued or undervalued a currency is against the US dollar. Published by The Economist from time to time.

It is calculated is by taking the price of a McDonald's Big Mac in each country to be measured, converting the price in local currency to US$, and comparing that with the current price in the US.

Burgeronomics is based on the theory of purchasing-power parity, which basically means that the value of currencies should, over the long term, move such that the exchange rate stabilises the price of a basket of common goods available in all the countries. In this case, the basket of goods taken is one Big Mac, available in most of the countries in the world.

see http://www.economist.com/editorial/freeforall/current/fn5520.html for an article on this (late April 2000, The Economist)

Log in or register to write something here or to contact authors.