A prism into the PPP puzzles: The micro-foundations of big mac real exchange rates

• 成果类型: Article
• 署名作者: Parsley, David C.; Wei, Shang-Jin
• 署名单位: Vanderbilt University
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1111/j.1468-0297.2007.02085.x
• 发表日期: 2007
• 页码: 1336-1356
• 关键词: purchasing-power-parity; mean-reversion; tests; price; specification; LAW

摘要

We match Big Mac prices with prices of its ingredients as a unique prism to study real exchange rates (RERs). This approach has several advantages. First, the levels of the Big Mac RER can be measured meaningfully. Second, as the exact composition of a Big Mac is known, the contributions of its tradable and non-tradable components can be estimated relatively precisely. Third, the dynamics of the RER can be studied in a setting free of several biases inherent in CPI-based RERs. Finally, a large cross-country dimension allows us to overturn the Engel result on what drives RERs.