Tweet
In looking at what the economists call “Purchasing Power Parity” it is a bit of fun to look at how much an American would have to pay for a Big Mac hamburger in various parts of the world. The Big Mac is useful for making these comparisons because it is made to a rigorous specification - you get precisely the same thing whether you buy it in New York, Moscow or Durban.
The average (New York, Chicago, Atlanta and San Francisco) price of a Big Mac in the USA is $3,57. But an American buying a Big Mac in other countries and paying for it in their currencies would have to pay a wide range of US Dollar equivalents:
Closest to the USA are Australia ($3,36) and New Zealand ($3,72). After that it gets weird - Hong Kong ($1,71), Malaysia ($1,70), Norway ($7,88), Euro Area ($5,34), South Africa ($2,24), Russia ($2,54) and China ($1,83).
This shows that when it comes to the Purchasing Power Parity for hamburgers the SA Rand is undervalued in terms of the US Dollar by 37%. Something I have long suspected!
Source The Economist
The average (New York, Chicago, Atlanta and San Francisco) price of a Big Mac in the USA is $3,57. But an American buying a Big Mac in other countries and paying for it in their currencies would have to pay a wide range of US Dollar equivalents:
Closest to the USA are Australia ($3,36) and New Zealand ($3,72). After that it gets weird - Hong Kong ($1,71), Malaysia ($1,70), Norway ($7,88), Euro Area ($5,34), South Africa ($2,24), Russia ($2,54) and China ($1,83).
This shows that when it comes to the Purchasing Power Parity for hamburgers the SA Rand is undervalued in terms of the US Dollar by 37%. Something I have long suspected!
Source The Economist
Comment