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Currency Valuation and Purchasing Power Parity

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  • Jamal Ibrahim Haidar

Abstract

This paper aims to highlight key limitations of The Economist magazine’s Big Mac Index (BMI). The Economist markets the BMI as a tool to determine valuation of currencies. This paper shows that the BMI is a misleading measure of currency valuation for economies whose markets are structurally different from the benchmark currency countries.

Suggested Citation

  • Jamal Ibrahim Haidar, 2011. "Currency Valuation and Purchasing Power Parity," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 12(3), pages 1-12, July.
    • Handle: RePEc:wej:wldecn:479
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    File URL: https://www.worldeconomics.com/Journal/Papers/Article.details?ID=479
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    Cited by:

    1. Marc Audi & Amjad Ali, 2023. "The Role of Environmental Conditions and Purchasing Power Parity in Determining Quality of Life among Big Asian Cities," International Journal of Energy Economics and Policy, Econjournals, vol. 13(3), pages 292-305, May.
    2. Camarero, Mariam & Ordóñez, Javier, 2012. "Nonlinear adjustment in the real dollar–euro exchange rate: The role of the productivity differential as a fundamental," Economic Modelling, Elsevier, vol. 29(2), pages 444-449.
    3. Haidar, Jamal Ibrahim, 2012. "Currency crisis transmission through international trade," Economic Modelling, Elsevier, vol. 29(2), pages 151-157.
    4. David De Villiers & Andrew Phiri, 2022. "Towards resolving the purchasing power parity (PPP) ‘Puzzle’ in newly industrialized countries (NIC’s)," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 31(2), pages 161-180, February.
    5. Lina Maddah & Hassan Sherry & Hussein Zeaiter, 2024. "Economic and Political Determinants of Sovereign Default and IMF Credit Use: A Robustness Assessment Post 2010," Economies, MDPI, vol. 12(7), pages 1-39, July.

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