Month: June 2005

Big Mac Index

Italians like their coffee strong and their currencies weak. That, at least, is the conclusion one can draw from their latest round of grumbles about Europe’s single currency. But are the Italians right to moan? Is the euro overvalued?

The Economist‘s Big Mac index (see table below) suggests they have a case: the euro is overvalued by 17% against the dollar. How come? The euro is worth about $1.22 on the foreign-exchange markets. A Big Mac costs €2.92, on average, in the euro zone and $3.06 in the United States. The rate needed to equalise the burger’s price in the two regions is just $1.05. To patrons of McDonald’s, at least, the single currency is overpriced.

The Big Mac index, which The Economist has compiled since 1986, is based on the notion that a currency’s price should reflect its purchasing power. According to the late, great economist Rudiger Dornbusch, this idea can be traced back to the Salamanca school in 16th-century Spain. Since then, he wrote, the doctrine of purchasing-power parity (PPP) has been variously seen as a “truism, an empirical regularity or a grossly misleading simplification.”

Big Mac Index

Source: The Economist

Language Skills Improving

After a day in Venezia and a day in Ferrara, I must admit that our Italian language skills are improving a bit! This language education via immersion is paying off. For starters, people used to ask us if we had a lighter and we would try our best to answer in Italian, probably saying something like “yes, I will shave your goat.” But now, we are even better and can respond with “yes, I will light your goat on fire.”

Seriously, though, I conversed entirely in Italian with one of the tourist board people (she did not speak 700 words a minute like most of the locals) and I walked out with a map and a lot of information, so I’m guessing I asked for the right things. (And no goats were harmed in the process.)

Venezia and Ferrara were both wonderful, and Aaron and I are trying to figure out what to do for our last night here in Bologna. Tomorrow afternoon we head off to Milano to wrap up our trip, so this will probably be the last post from abroad. The whole experience is passing by all too quickly!

In Bologna

Aaron and I have wrapped up our travels in Firenze and Arezzo and have headed north to Bologna. Last night we met up with my long-time friend Marika and went out to a traditional Italian bar. Very cool!

By the way, we have a few more observations: Three, most of the people we have seen have only stopped smoking long enough to return a cell phone text message or to change the song on their iPods. Four, it doesn’t matter how much you know the language, you still feel like a small fish in a very large pond.

Our waistlines are expanding and our wallets are shrinking, but we’re having an incredible time. I believe tonight we’re going to try out a discothecca and then probably head to Venezia tomorrow, just to experience the canals and say that we saw where The Italian Job all went down. Ferrara is on our list, too.

For those who are awaiting our return, we’re never coming back to the States. :p

Roberto Benigni

Ciao, ancora!

Aaron and I just returned from a day in Arezzo, the birthplace of Roberto Benigni and the location for the filming of La Vita è Bella (Life is Beautiful). Gorgeous! It’s a very quiet city with a lot of charm and character.

Congratulations to those who graduated from the Simon School today. Buona fortuna e tanti auguri.

Off to browse Firenze a little more. Arriverderci!