Should Ronald McDonald be the Chairman of a Global Central Bank?
The Economist recently released their fun Big Mac Index. Although not a perfect device, the index begs the question whether Ronald McDonald would do a better job as overseer of global currencies than the current crop of Central Bank leaders …
THE Big Mac index is based on the theory of purchasing-power parity (PPP)-exchange rates should equalise the price of a basket of goods in different countries. The exchange rate that leaves a Big Mac costing the same in dollars everywhere is our fair-value benchmark. So our light-hearted index shows which countries the foreign-exchange market has blessed with a cheap currency, and which has it burdened with a dear one.
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