The Big Mac Standard: A Statistical Illustration
AbstractWe demonstrate a statistical procedure for selecting the most suitable empirical model to test an economic theory, using the example of the test for purchasing power parity based on the Big Mac Index. Our results show that supporting evidence for purchasing power parity, conditional on the Balassa-Samuelson effect, depends crucially on the selection of models, sample periods and economies used for estimations.
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Bibliographic InfoPaper provided by Institute of Economic Research, Hitotsubashi University in its series Discussion Paper Series with number a446.
Length: 20 p.
Date of creation: Nov 2003
Date of revision:
Note: Bibliography: p. 11-12, First Draft: March, 1997; Second Draft: September, 2002; Revised: October, 2003
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More information through EDIRC
Big Mac Index; Purchasing Power Parity; Panel Data;
Other versions of this item:
- F31 - International Economics - - International Finance - - - Foreign Exchange
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-11-03 (All new papers)
- NEP-IFN-2003-11-03 (International Finance)
- NEP-MFD-2003-11-03 (Microfinance)
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