The Big Mac Index, compiled by The Economist, takes the biggest
symbol in fast food and uses it to measure the power of the
world’s currencies. Metro examines what ‘burgernomics’ says
about Britain’s economy. Would you like fries with that? Or will
you be having the fiscal stimulus instead? As well as having an
effect on your appetite, the Big Mac also has a say on the
economy. McDonald’s signature burger has been used to measure
the interplay between the world’s currencies for 26 years. The
Big Mac Index was established by The Economist in 1986 as a fun
way of examining if currencies were at their correct level.
Based on the notion that a dollar should buy the same amount in
all countries, the index roughly measures the purchasing power
parity (PPP) between two currencies. PPP adheres to the notion
that exchange rates should adjust to make goods the same price
in each country. The goal of the Big Mac Index was to ‘make
exchange-rate theory a bit more digestible’. Burgernomics, as
The Economist dubbed it, was