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The Big Mac Standard: A statistical Illustration

Author

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  • Yukinobu Kitamura

    (Institute of Economic Research, Hitotsubashi University)

  • Hiroshi Fujiki

    (Institute for Monetary and Economic Studies, Bank of Japan)

Abstract

We demonstrate a statistical procedure for selecting the most suitable empirical model to test an economic theory, using the example of the test for purchasing power parity based on the Big Mac Index. Our results show that supporting evidence for purchasing power parity, conditional on the Balassa-Samuelson effect, depends crucially on the selection of models, sample periods and economies used for estimations.

Suggested Citation

  • Yukinobu Kitamura & Hiroshi Fujiki, 2004. "The Big Mac Standard: A statistical Illustration," Economics Bulletin, AccessEcon, vol. 6(13), pages 1-18.
    • Handle: RePEc:ebl:ecbull:eb-04f30011
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    References listed on IDEAS

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    Cited by:

    1. Joe Cox, 2008. "Purchasing power parity and cultural convergence: evidence from the global video games market," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 32(3), pages 201-214, September.
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    3. Sandeep Mazumder, 2016. "iPad Purchasing Parity: Farewell to the Big Mac Index," Economics Bulletin, AccessEcon, vol. 36(4), pages 2128-2136.

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    More about this item

    JEL classification:

    • F3 - International Economics - - International Finance
    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables

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