How to compare currencies' subjective value?
September 16, 2007 2:30 PM Subscribe
I understand that trading between currencies is what sets their exchange value, but is there a standard way of determining how each currency feels to people living in each currency's native country/ies?
This may have been asked here recently, but I couldn't find it. In case it's not clear what I'm asking, an example would be whether a pound feels twice as valuable to someone living in London as a dollar feels to someone living in New York (assuming neither travels outside their home city). My guess would be that a pound in London feels more valuable than a dollar in New York, but not twice as valuable. And my guess is that a Euro to a Berliner feels about equal to a dollar to a New Yorker, but is there a way to quantify the comparative subjective value? Are there conversion tables for this like there are for exchange rates? Is there something economically significant about a discrepancy between two currencies' exchange value and the comparison of those two currencies' felt, local values?
This may have been asked here recently, but I couldn't find it. In case it's not clear what I'm asking, an example would be whether a pound feels twice as valuable to someone living in London as a dollar feels to someone living in New York (assuming neither travels outside their home city). My guess would be that a pound in London feels more valuable than a dollar in New York, but not twice as valuable. And my guess is that a Euro to a Berliner feels about equal to a dollar to a New Yorker, but is there a way to quantify the comparative subjective value? Are there conversion tables for this like there are for exchange rates? Is there something economically significant about a discrepancy between two currencies' exchange value and the comparison of those two currencies' felt, local values?
You might want to look at Purchasing Power Parity (which is the basis of the Big Mac Index)
posted by thrako at 2:40 PM on September 16, 2007
posted by thrako at 2:40 PM on September 16, 2007
You could try the iPod index instead, if you prefer...
posted by loquax at 7:06 PM on September 16, 2007
posted by loquax at 7:06 PM on September 16, 2007
This thread is closed to new comments.
posted by Bighappyfunhouse at 2:32 PM on September 16, 2007