A beefed-up version of the Big Mac index

The Big Mac index

Currency comparisons, to go

Jul 28th 2011, 14:35 by The Economist online

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A beefed-up version of the Big Mac index suggests that the Chinese yuan
is now close to its fair value against the dollar

THE Economist’s Big Mac index is a fun guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of a basket of goods and services around the world. At market exchange rates, a burger is 44% cheaper in China than in America. In other words, the raw Big Mac index suggests that the yuan is 44% undervalued against the dollar. But we have long warned that cheap burgers in China do not prove that the yuan is massively undervalued. Average prices should be lower in poor countries than in rich ones because labour costs are lower. The chart above shows a strong positive relationship between the dollar price of a Big Mac and GDP per person.

PPP signals where exchange rates should move in the long run. To estimate the current fair value of a currency we use the “line of best fit” between Big Mac prices and GDP per person. The difference between the price predicted for each country, given its average income, and its actual price offers a better guide to currency under- and overvaluation than the “raw” index. The beefed-up index suggests that the Brazilian real is the most overvalued currency in the world; the euro is also significantly overvalued. But the yuan now appears to be close to its fair value against the dollar—something for American politicians to chew over. Read more in our Economics focus and leader.

韓國遭暴雨襲擊 至少38人死亡

Reuters

週三在首爾東南部的光州﹐因暴雨導致一條河流決堤後救援人員帶領居民躲避洪水。

週

三﹐韓國大部分地區普降暴雨﹐導致山洪暴發和山體滑坡﹐造成至少38人死亡﹐這是韓國近期雨季造成傷亡人數最多的一次。此次雨季已持續兩個月﹐降水量已經創歷史之最。

韓國暴雨致數十人身亡

暴雨襲擊韓國首都首爾及其它地區，引發嚴重泥石流，致使數十人身亡。

週三清晨﹐位於東北部江原道省的春川地區發生山體滑坡﹐數棟大樓被捲走﹐包括兩家小型賓館﹐當時一群大學生正在賓館睡覺。11名學生和另外兩人在山體滑坡中喪生。另有20多人受傷﹐部分傷勢嚴重。

當天上午﹐首爾也發生山體滑坡﹐泥土、樹木和其他廢棄物將一幢高層公寓樓沖毀﹐導致10人喪生﹐另有近400人被疏散。

Lee Sang-hak/Associated Press

自週二來，韓國多地連降暴雨，發生洪水和泥石流災害。至少34人喪生，超過600人無家可歸。

另有至少五人在首爾的山洪暴發中身亡。其中一人是零售商Shinsegae Co.董事局主席的夫人。由於水位不斷上升﹐她被困在家中的地下室﹐最後溺水身亡。Shinsegae是韓國最大企業之一。

政府官員說﹐另有六人在京畿道省的各種事故中喪生。首爾位於京畿道省中心。

暴雨自週二下午開始﹐持續到週三仍強度未減。24小時內累計降雨量超過400毫米。氣象中心預計在週四暴雨開始向東移動前可能還會有250到300毫米的降雨量。

風暴帶還可能會在朝鮮帶來類似的強降雨。但通常都在自然災害發生後幾天才報道損失情況的朝鮮官方媒體週三未報道相關消息。

Evan Ramstad