2 Calculate the dollar price of a Big Mac (column 3), the implied PPP of the dollar (column 4), and the local currency under(-)/over(+)valuation (column 6) for Denmark and Hong


3 In 2003, it cost $0.80 to buy a Big Mac in Argentina, $2.54 to buy a Big Mac in the USA, and $4.61 to buy a Big Mac in Switzerland. How do we explain these deviations from PPP?

4 A web page of (see provides exchange rate trends of various currencies. Use this web page to obtain the latest version of the hamburger standard shown in table 5.2.

Sources', as of Feb. 11, 2003; R. E. Cumby, "Forecasting Exchange Rates and Relative Prices With the Hamburger Standard. Is What You Want What You Get With McParity?" Manuscript, Georgetown University, 1995; and M. R. Pakko and P. S. Pollard, "For Here or To Go? Purchasing Power Parity and the Big Mac," Review, Federal Reserve Bank of St. Louis, Jan./Feb. 1996, pp. 3-21.

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