The Big Mac Standard: A Statistical Illustration

Hiroshi Fujiki and Yukinobu Kitamura ()

Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: We demonstrate a statistical procedure for selecting the most suitable empirical model to test an economic theory, using the example of the test for purchasing power parity based on the Big Mac Index. Our results show that supporting evidence for purchasing power parity, conditional on the Balassa?Samuelson effect, depends crucially on the selection of models, sample periods and economies used for estimations.

Keywords: Words: Big Mac Index; Purchasing Power Parity; Panel Data (search for similar items in EconPapers)
JEL-codes: F31 C23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ifn and nep-mfd
Date: 2003-11
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Journal Article: The Big Mac Standard: A statistical Illustration (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:hit:hituec:a446

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