IDEAS home Printed from https://ideas.repec.org/a/eee/ecofin/v77y2025ics1062940825000385.html
   My bibliography  Save this article

The Big Mac index: An exact multilateral clarification

Author

Listed:
  • Kunkler, Michael

Abstract

The Economist’s Big Mac index measures the external purchasing power of a currency relative to a common numéraire currency. The Big Mac index is based on the economic theory of absolute purchasing power parity. There are two versions of the index, namely, the Raw Big Mac index and the GDP-adjusted Big Mac index. The bilateral valuations for both versions are conditional on the common numéraire currency. For example, the common numéraire currency is always at fair value, whereas the valuations of the other currencies are measured relative to the common numéraire currency. This paper extends previous research by providing a theoretical framework to calculate exact multilateral valuations for a system of currencies. The methodological extension sheds light on a number of linkages between the bilateral valuations and the multilateral valuations for both versions of the Big Mac index.

Suggested Citation

  • Kunkler, Michael, 2025. "The Big Mac index: An exact multilateral clarification," The North American Journal of Economics and Finance, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:ecofin:v:77:y:2025:i:c:s1062940825000385
    DOI: 10.1016/j.najef.2025.102398
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1062940825000385
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.najef.2025.102398?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecofin:v:77:y:2025:i:c:s1062940825000385. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620163 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.