PPP is one of the most widely researched areas in international finance
and one of the most controversial in the theory of exchange rate
determination. This book demonstrates the applications of Purchasing
Power Parity in exchange rate determination as well as more practical
applications of salary comparison and the cost-of living across borders.
It uses The Economist's annual Big Mac Index in place of the traditional
basket of services used in PPP research. The author demonstrates that
this is a good solution to the index-number problem since it is readily
available and more appealing as an international monetary standard. The
book also shows how The Big Mac Index could have been used to predict
the Asian Currency Crisis and the Mexican Peso stand-off where more
traditional economic measures failed.