The Economist's Big Mac Index (also described on Wikipedia if you're not a subscriber) was created (somewhat tongue-in-cheek) as a measure to compare the purchasing power of money in different countries. Since Big Macs are available just about everywhere in the world, the price of a Big Mac in Sweden — expressed in US dollars — gives an American traveler a sense of how much more expensive things will be in Stockholm. And comparing the price of a Big Mac in several countries converted to a single baseline currency is a measure of how over-valued (or undervalued) those other currencies are compared to that baseline.
Since its inception in 1986, the Big Mac Index has been compiled and calculated manually, twice a year. But starting with the most recent published index (July 2018, shown above), the index is now calculated with R. This is the first example of a new program at The Economist to publish the data and methods behind its journalism, and here the data and code behind the Big Mac Index have been published as a Github repository. The method behind the index is provided as a richly-commented Jupyter Notebook, where you can also find some additional charts and within-currency analyses not published in the main index.
The repository is published under an open MIT license, meaning you can remix the code to create a new index on prices of another international commodity, provided you can find the data. Find everything you need at the Github repository linked below.
Github (TheEconomist): Data and methodology for the Big Mac index
I have to take issue with the first chart title "The British Pound is 23% undervalued ..." Use of the term undervalued makes it sound like it should be parity. It shouldn't. With Brexit, and in general, the pound should most likely be worth less than the dollar (although historically its alway valued significantly higher), and should have less buying power due to a significantly smaller and weaker economy than the U.S.
Posted by: DrewMuellerEcon | October 13, 2018 at 00:32