Cologne, May 27 dpa -
The U.S. dollar is undervalued against the Deutsch- mark based on
how many"Big Mac" hamburger sandwiches the two currencies
can purchase, said one of Germany's leading institutes.
The Institute of the German Economy (IW) in Cologne noted
that the popular sandwich by the McDonald's restaurant chain
is increasingly being used by economists around the world as a
measure of currencies' relative purchasing power. The institute
said that currency exchange rates are often unreliable as an
instrument to measure purchasing power. At the same time, "baskets"
ofproducts used to arrive at comparative purchasing power are
complicated to compile. A simple alternative, now that McDonald's
has spread to virtually every country on earth, has become to look at
what a Big Mac costs, the IW said. "A particularly hungry American
an buy five Big Macs for 11 dollars. If he exchanged the money into
Deutsch-marks, his 18 marks in Germany can just barely obtain four
Big Macs," the IW said. Conclusion: based on the Big Mac index, the
dollar is undervalued, the institute said. Americans can get their best
Big Mac buy these days in Moscow, where one
sandwich costs only about 59 cents. But Russians must
"work nearly two days in order to afford this
meaty capitalist achievement - longer than people
in any other country", the IW said.
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