A currency's misvaluation versus an index of other currencies, termed the currency's multilateral misvaluation, depends on the index weights. This study clarifies the idea of consistency in multilateral misvaluation and provides instructive empirical illustrations using several currency index...

The Economist's adjusted Big Mac index takes GDP into account in currency valuation, but the methodology is not explained. We show that the key to understanding the methodology is to distinguish between a currency's bilateral valuation (versus a specific currency) and the currency's overall...