Chart 5: Correlating medium-run exchange rate movements in the G7 with deviations from the law of one price (as measured by The Economist’s Big Mac index) Nominal appreciation against the US dollar over next five years (%) 60 50 40 30 20 10 0 -10 -20 -30 -40 -30  -20  -10 0 10 20 30 40 Degree of overvaluation predicted by the Big Mac index (%)  Note: The sample begins in 2000 and consists of data from Canada, France, Germany, Italy, Japan and the United Kingdom.
At this year’s conference, we are going to discuss a topic that has been foremost on our minds for the past nine months: “Economic and monetary policy under wartime conditions.” Since February 24 of this year, we have been witnessing something that used to be unimaginable over the past decades: outright war in Europe.