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The Economist.

From The Economist in London, this is Money Talks, a weekly conversation about themes in London.

This is Money Talks, a weekly conversation about themes in the world of finance, business and economics.

I'm Andrew Palmer, the Business Affairs Editor, and joining me for the first edition of 2016,

A Ryan Avond, who writes our free exchange column, and Sumaya Keynes,

our economics correspondent.

This week the Economist publishes its Big Mac Index, a light-hearted guide, first published

in 1986, to assess whether currencies are at their

correct level. So Mayor let's start by just explaining to people what the Big Mac

index is and why it is useful. So the Big Mac index takes the price of the Big Mac in lots of

different countries and then converts them into dollar terms. So the idea is that in

the long run exchange rates should change so that a dollar could buy the same amount of stuff

in each country. So in the long run your price of Big Mac should be the same in dollar terms

across all these different countries. But what we see is that some countries have cheaper big max than others and that is taken as an indicator that their currency is undervalued relative to the dollar.

Okay, right and we've been doing this for some for some time and it's got a life of its own and we make some fun of it but people do actually use it out there analysts use it in presentations etc.

...