The “Big Mac Index” in China and US

Posted on February 20, 2013 · Posted in Newsletters

“Do the difficult things while they are easy and do the great things while they are small. A journey of a thousand miles must begin with a single step.” – Lao Tzu

A few quarters ago, we highlighted The Economist’s Big Mac index to draw attention to some of the imbalances within currency valuations at that time. The idea behind the index was to demonstrate purchasing-power parity (PPP), a theory that posits the price of an identical basket of goods should migrate to equilibrium over time.

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