[April 2, Lisbon]
So where is the beef?
A principle (observed somewhat approximately) of economics is "purchasing power parity". The idea is that after converting for foreign exchange rates, a given amount of money should buy the same amount of the same items, in all countries.
When prices are way out of line, then something is out of balance in foreign exchange and will likely correct over time. Thus I am pleased to report that a Big Mac Meal costs 4.40 Euros. If memory serves (I am not a regular patron), the Big Mac Meal in the U.S. costs about $4.40. Yet with current dollar/Euro rates, it equates to about $7 over here.
So, in spite of the dollar woes we are currently suffering, there is hope for times ahead. Also, I see an outstanding opportunity to make a killing, if only we can find a way to get those Houston hamburgers to Lisbon fast enough.
(By the way, this financial metric is not original with me; it has long been used by the Economist magazine.)
3 comments:
Hey guys. Avril au Portugal? Must be nice. I've got a similar price shocker while attending my niece's wedding in Gothenborg (Sweden) this last March.
What you are refering here to is what sailing cruisers call beeronomy.
Things should cost the same amount of beers no matter where you go.
In US a sixpack costs on aver. $6.00. so one beer is $1.00. So a Big Mack
Meal should cost about 4.4 local beers in Lisbon.
If someone charges you more than that, you know they are screwing you.
Now as far the the hope - let's hope the Big Mack Meal cost does not climb to $7.00 here in US to restore the balance to the world!
Have a great time over there.
Janusz
I'm not sure how reliable all this is, really. I have the impression so far that beer is realtively cheap here (data collection actively in progress). So you probably need a "basket of goods".
Regarding your comment on hope, yes, equilibration by price adjustment in the US is a possibility -- but one so terrible for retirees to contemplate that I did not want to mention it.
Ah, the Big Mac Index....that always cracked me up. I would suggest it only be used for economic comparison though...you didn't actually eat one, did you? :)
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