Apple indices as a new informal measure of purchasing power parity

Sa？etak This paper examines the validity of the Purchasing Power Parity (PPP) theory, using 12 different single-product baskets of Apple devices. Given the presented advantages of Apple indices as PPP measurement in comparison to the most prominent informal index- the Big Mac index (BMI), they are therefore pointed out to be more adequate modern measures of PPP. Presented study investigates if the theory holds for different products within the same niche across 37 countries. Furthermore, this paper presents results of cross country ordinary least squares (OLS) regression analysis of the data for 6 different Apple products. Results point out that most-favoured nation (MFN) duty rates and sales taxes together with additional duties and taxes are main factors that affect currency valuation against the U.S. dollar. In contrary to BMI, Apple indices indicate real undervaluation of most of the national currencies against the U.S. dollar and have also shown to be more supportive to the PPP validity than the BMI