I Hate McDonalds Anyhow
Last week's Economist featured the latest rendition of the 'ol hamburger standard, the Big Mac Index. Assuming Purchasing Power Parity (PPP), the cost of a common good should equalize across currencies. The Economist informally measures exchange rates by applying PPP to Big Macs, determining whether or not currencies are over or undervalued with respect to the US dollar. This latest Index finds the Swiss Franc--a Big Mac costs $5.05 USD in Switzerland versus $3.06 in the United States--the most overvalued, at 65%. The Index finds, not surprising, China's yuan the most undervalued, at -59%. A Big Mac in China is only $1.27. Averaging the Euro area gives an average cost of $3.58, an overvalue of 17%--also not really surprising.
Of course, the price differences also convey costs that do not easily converge: labor, land, utilities. A possible significant chunk of the $2 difference between a Big Mac in the United States and Switzerland is such uneasily traded costs.
A paper cited in the article, A Prism into the PPP Puzzles: The Micro-foundations of Big Mac Real Exchange Rates, shows just how disparate cost inputs can be. The price of the components of a Big Mac that are internationally traded converge quickly: cheese in 18 months, bread in 14 months, onions in only 8. Non-traded components, however, converge much more slowly: wages converge in 27 months, rent in 55 months, and electricity in 56.
Cambridge has a lot of wireless networks
More NetworkManager hacking. Added a Connection Information dialog, ala Netapplet. And this evening I finished a first-pass at gnome-keyring support.