Working Paper: NBER ID: w29415
Authors: Lee A. Craig; Julianne Treme; Thomas J. Weiss
Abstract: We constructed a time series of menu prices for the identifiable restaurants at which James Bond dined in France and the UK that yields one of the few international price series representing luxury services. This series enabled us to calculate a real exchange rate based on prices pertinent to international travelers. We also compiled a time series on the salary of workers in the British Civil Service at Grade 7, like Bond, from 1953 to 2019. Our results indicate that French restaurant prices increased faster than Grade 7 salaries over the entire period and changes in the British exchange rate were not favorable for British travelers. To dine weekly in France, during the 1950s and 1960s, Bond would have spent 18 percent of his salary; whereas over the course of the Euro era the same basket of luxury services would have required on average 26 percent of his salary. Finally, our data indicate a likely violation of the law of one price during both the Pound-Franc and Pound-Euro eras.
Keywords: real exchange rate; luxury services; James Bond; menu prices; civil service salaries
JEL Codes: D4; E3; F2; N10; N14; Z3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Rising restaurant prices in France (P22) | Increased proportion of British civil servant's salary required to dine in France (H69) |
| French restaurant prices increased faster than grade 7 salaries in the British civil service (P22) | Increased proportion of a British civil servant's salary required to dine in France (H69) |
| Rising restaurant prices in France (P22) | Increased dining expenses relative to income for British civil servants (H69) |
| Violation of the law of one price (F16) | Non-parity between different currencies and dining costs (F31) |