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Restaurant Prices and the Mexican Peso

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  • Thomas M Fullerton Jr

    (University of Texas at El Paso)

  • Roberto Coronado

    (Federal Reserve Bank of Dallas)

Abstract

International restaurant franchise price data are used to examine purchasing power parity and the behavior of the Mexican peso. Sample data are from El Paso, Texas and Ciudad Juarez, Mexico. A battery of statistical tests indicate that the price ratio and the exchange rate are statistically different from each other, but correlated.

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Bibliographic Info

Paper provided by EconWPA in its series International Finance with number 0403004.

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Length: 17 pages
Date of creation: 04 Mar 2004
Date of revision:
Handle: RePEc:wpa:wuwpif:0403004

Note: Type of Document - word doc; prepared on Win98; pages: 17. International restaurant franchise price data are used to examine purchasing power parity and the behavior of the Mexican peso.
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Web page: http://128.118.178.162

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Keywords: Purchasing power parity; restaurant prices; Mexico;

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References

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  1. Diebold, Francis X & Husted, Steven & Rush, Mark, 1991. "Real Exchange Rates under the Gold Standard," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1252-71, December.
  2. Dornbusch, Rudiger, 1976. "Expectations and Exchange Rate Dynamics," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1161-76, December.
  3. Maurice Obstfeld and Kenneth Rogoff., 2000. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," Center for International and Development Economics Research (CIDER) Working Papers C00-112, University of California at Berkeley.
  4. Charles Engel & John H. Rogers, 1994. "How Wide is the Border?," NBER Working Papers 4829, National Bureau of Economic Research, Inc.
  5. Thomas M. Fullerton, 1993. "Un modelo macroeconométrico para pronosticar la economía colombiana," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE.
  6. Parsley, David C. & Wei, Shang-Jin, 2001. "Explaining the border effect: the role of exchange rate variability, shipping costs, and geography," Journal of International Economics, Elsevier, vol. 55(1), pages 87-105, October.
  7. Ong, Li Lian, 1997. "Burgernomics: the economics of the Big Mac standard," Journal of International Money and Finance, Elsevier, vol. 16(6), pages 865-878, December.
  8. John P. Judd, 1986. "M1 and monetary policy," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue may9.
  9. Bhagwati, Jagdish N, 1984. "Why Are Services Cheaper in the Poor Countries?," Economic Journal, Royal Economic Society, vol. 94(374), pages 279-86, June.
  10. Cheung, Yin-Wong & Lai, Kon S., 1994. "Mean reversion in real exchange rates," Economics Letters, Elsevier, vol. 46(3), pages 251-256, November.
  11. Heston, Alan & Summers, Robert, 1996. "International Price and Quantity Comparisons: Potentials and Pitfalls," American Economic Review, American Economic Association, vol. 86(2), pages 20-24, May.
  12. Craig S. Hakkio & Mark Rush, 1990. "Cointegration: how short is the long run?," Research Working Paper 90-08, Federal Reserve Bank of Kansas City.
  13. 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.
  14. Kenneth Rogoff, 1996. "The Purchasing Power Parity Puzzle," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 647-668, June.
  15. Rogers, J.H. & Jenkins, M.A., 1993. "Haircuts or Hysteresis? Sources of Movements in Real Exchange Rates," Papers 4-93-6, Pennsylvania State - Department of Economics.
  16. Don P. Clark & W. Charles Sawyer & Richard L. Sprinkle, 1997. "The Value of the "Southern" Dollar," The Review of Regional Studies, Southern Regional Science Association, vol. 27(2), pages 185-193, Fall.
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Cited by:
  1. Yoskowitz, David W. & Pisani, Michael J., 2007. "Risk and reward: Currency substitution and acceptance of the Mexican peso by firms in the United States southern frontier," The Quarterly Review of Economics and Finance, Elsevier, vol. 47(3), pages 422-434, July.
  2. Blanco-Gonzalez, Lorenzo & Fullerton, Thomas Jr., 2006. "Borderplex menu evidence for the law of one price," Economics Letters, Elsevier, vol. 90(1), pages 28-33, January.
  3. Blanco-Gonzalez, Lorenzo & Fullerton, Thomas M., Jr., 2008. "La Ley del Precio Unitario en la Zona Metropolitana Fronteriza
    [The Law of One Price in the Borderplex]
    ," MPRA Paper 14687, University Library of Munich, Germany.
  4. Michael J. Pisani & Thomas M. Fullerton, Jr., 2013. "Microenterprise Peso Acceptance in El Paso, Texas," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(2), pages 75-94, November.
  5. Fullerton Jr., Thomas M. & Fierro, Karen P. & Villalobos, Emmanuel, 2009. "Cross-border restaurant price and exchange rate interactions," The North American Journal of Economics and Finance, Elsevier, vol. 20(3), pages 281-288, December.

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