Monthly Archives: December 2016

A Big MacParity Guide to Undervalued Currencies

China is not high on the list for “day one sanctions” if one were to look at this fast-food data.

figure5a

Figure 1: Log relative dollar price of Big Mac against dollar price of US Big Mac (July 2016) versus log relative per capita income in PPP terms (2016 estimates); regression fit from quadratic specification (black dots), and 90% prediction interval (gray dots). Source: Economist, World Bank World Development Indicators, and author’s calculations. Data [XLSX]

Using the methodology outlined in this post, it’s clear that by the price criterion, Russia’s currency is much more undervalued (at 50% in log terms) than China’s.

“The Future’s So Bright, I Gotta Wear Shades”

That’s what Governor Walker said today about Wisconsin’s economy, quoting from a 1980’s song. This was apparently spurred by DWD’s release “Wisconsin Employment Reaches All-Time High in November”. This statement is true, when referring to the relatively imprecisely measured household survey figures [1]. It is not true when referring the (more precisely measured) establishment series.

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