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Restaurant Prices and the Mexican Peso

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  • Thomas M. Fullerton
  • Roberto Coronado

Abstract

Of prime interest to border economies is exchange rate performance and currency valuation. Commonly used tools for this task include purchasing power parity (PPP) nominal benchmarks, and inflation‐adjusted trade‐weighted indices. The latter have the advantage of relying on commonly available international macroeconomic data but overlook microeeonomic information that may offer additional insight to issues surrounding exchange rate policy debates. Other efforts have utilized small samples of international product price comparisons to shed light on currency valuation questions. This paper develops one such tool by repeated sampling of prices charged for identical menu items sold at restaurant franchises in El Paso, Texas, and Ciudad Juárez, Chihuahua. A battery of statistical tests indicate that the international currency value of the peso consistently differed from the exchange rate implied by the border region restaurant price ratios in 1997, 1998, and 1999.

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  • Thomas M. Fullerton & Roberto Coronado, 2001. "Restaurant Prices and the Mexican Peso," Southern Economic Journal, John Wiley & Sons, vol. 68(1), pages 145-155, July.
    • Handle: RePEc:wly:soecon:v:68:y:2001:i:1:p:145-155
    DOI: 10.1002/j.2325-8012.2001.tb00403.x
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    1. Thomas Fullerton & Osvaldo Miranda, 2009. "Borderplex brand name medicine price differences," Applied Economics, Taylor & Francis Journals, vol. 43(8), pages 929-939.

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    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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