Great Graphic: Big Mac Update

Here is a Great Graphic from the Economist:  It updates its classic look at purchasing power parity by comparing the price of Big Mac's from around the world  What is of added interest in this reiteration is that is depicts the changes since 2007.  

There are more sophisticated approaches to purchasing power parity as well.  For your interest,  below you will find a table of the over- and under-valuations according to the OECD (courtesy of Bloomberg).  It is interesting to note that recently the euro became the only major currency under-valued according to the OECD. 

A review of the dollar's valuation against a broad range of currencies, suggests that the greenback is largely under-valued against the major currencies and over-valued against the emerging market currencies, with some notable exceptions.   Over time, this would seem to imply that the major currencies will have to depreciate against the emerging market currencies.  This can take on a number of different forms and different combinations of real and nominal adjustment.  

Great Graphic: Big Mac Update Great Graphic:  Big Mac Update Reviewed by Marc Chandler on July 27, 2012 Rating: 5
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