By now, we hope that you are familiar with the Big Mac Index compiled by The Economist. Now, The Wall Street Journal has developed the Starbucks grande latte index, a measure of the price of a grande latte in dollars across various countries to examine purchasing power parity. Of course, we have the same dollar purchasing power parity problem since a grande latte costs $4.30 in New York and $3.55 in Detroit and San Francisco. As with any financial or economic estimate, there can be a great deal of disparity on the answer. In this case, one expert estimates the value of the yen will fall to ¥120/$, while another argues that the yen is already devalued 12 percent from its fair value of ¥84/$.
