Published July 2025
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The Economics of a Burger: Testing the Balassa–Samuelson Effect Using the Big Mac Index
Description
Short Bio: The author is the CEO of Boolean Digital Studio LLP, he has several certifications and degrees in technology, mathematics and computer science. He has written 4 papers earlier in mathematical finance. Complete details of his pedigree is available on his linked profile.
Abstract (English)
This paper empirically investigates the Balassa–Samuelson effect using The Economist’s Big Mac Index for 2024–2025. By relating burger prices to GDP per capita, we test the hypothesis that richer countries exhibit higher price levels due to productivity-driven wage spillovers into non-tradable sectors. Results confirm a strong positive association (elasticity ≈ 0.4), validating the intuitive link between income and cost of living.
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