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What will happen to Uruguay's PPP (the theory of purchasing-power parity) in 2032? Answer: in equilibrium. Until that moment, under-valued.

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DiegoVallarino/Big-Mac-Index---Time-Series

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Big-Mac-Index---Time-Series

The Big Mac index was introduced in The Economist in September 1986 by Pam Woodall as a semi-humorous illustration of PPP and has been published by that paper annually since then. The index also gave rise to the word burgernomics. The Big Mac PPP exchange rate between two countries is obtained by dividing the price of a Big Mac in one country (in its currency) by the price of a Big Mac in another country (in its currency). This value is then compared with the actual exchange rate; if it is lower, then the first currency is under-valued (according to PPP theory) compared with the second, and conversely, if it is higher, then the first currency is over-valued. In this case I studied Uruguay.

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What will happen to Uruguay's PPP (the theory of purchasing-power parity) in 2032? Answer: in equilibrium. Until that moment, under-valued.

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