With A Soft Landing Looking Likely, The Dollar Falls On The CFR Mini Mac Index

Source: Cobden Centre
by Benn Steil & Elisabeth Harding

“The ‘law of one price’ holds that identical goods should trade for the same price in an efficient market. But how well does it actually hold internationally? The Economist magazine’s Big Mac Index uses the price of McDonald’s Big Macs around the world, expressed in a common currency (U.S. dollars), to measure the extent to which various currencies are over- or under-valued. The Big Mac is a global product, identical across borders, which makes it an interesting one for this purpose. But the law of one price assumes there are no restrictions on, or costs involved in, the movement of goods, and Big Macs travel badly. So in 2013 we created our own Mini Mac Index, which compares the price of iPad minis across countries.” (02/07/24)

https://www.cobdencentre.org/2024/02/with-a-soft-landing-looking-likely-the-dollar-falls-on-the-cfr-mini-mac-index/