Burgernomics

I heard this discussed on yesterday: The Big Mac Index. The Index purports to do the following:

Burgernomics is based on the theory of purchasing-power parity, the notion that a dollar should buy the same amount in all countries. Thus in the long run, the exchange rate between two countries should move towards the rate that equalises the prices of an identical basket of goods and services in each country. Our "basket" is a McDonald's Big Mac, which is produced in about 120 countries. The Big Mac PPP is the exchange rate that would mean hamburgers cost the same in America as abroad. Comparing actual exchange rates with PPPs indicates whether a currency is under- or overvalued.

The link above goes to a whole site with various pieces from the Economist on the Big Mac Index. It is actually quite interesting and worth a looksee.