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The LoP game: BigMac versus Fortnite

Author

Listed:
  • Pierdzioch, Christian
  • Schöber, Timo
  • Stadtmann, Georg

Abstract

We analyze the law of one price (LoP) based on BigMac and Fortnite prices. We find a positive but less than a perfect correlation between the over-/undervaluations of the two indices. While LoP holds for the Fortnite data, it does not hold for the BigMac data.

Suggested Citation

  • Pierdzioch, Christian & Schöber, Timo & Stadtmann, Georg, 2020. "The LoP game: BigMac versus Fortnite," Discussion Papers 417, European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics.
    • Handle: RePEc:zbw:euvwdp:417
    as

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    References listed on IDEAS

    as
    1. Engel, Charles & Rogers, John H, 1996. "How Wide Is the Border?," American Economic Review, American Economic Association, vol. 86(5), pages 1112-1125, December.
    2. DavidC. Parsley & Shang-Jin Wei, 2007. "A Prism into the PPP Puzzles: The Micro-Foundations of Big Mac Real Exchange Rates," Economic Journal, Royal Economic Society, vol. 117(523), pages 1336-1356, October.
    3. Robert E. Cumby, 1996. "Forecasting Exchange Rates and Relative Prices with the Hamburger Standard: Is What You Want What You Get With McParity?," NBER Working Papers 5675, National Bureau of Economic Research, Inc.
    4. Click, Reid W., 1996. "Contrarian MacParity," Economics Letters, Elsevier, vol. 53(2), pages 209-212, November.
    5. Kenneth W. Clements & Yihui Lan & Shi Pei Seah, 2012. "The Big Mac Index two decades on: an evaluation of burgernomics," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 17(1), pages 31-60, January.
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    More about this item

    Keywords

    Fortnite; BigMac; law of one price;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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