The idea of this contribution has come after the publication in The Economist The Big Mac index. Such index was introduce to explain the concept of real currency exchange rate needed to deal with the problem of varying price levels in different countries. The different price levels cause the different purchasing powers of the same currency around the world. For example, the network of fast food restaurants around the world McDonald’s serves everywhere the same products, consider one of them - Big Mac. Having in mind the same quality of the product we do observe different prices of Big Mac around the world and so have to accept the varying prices or purchasing powers of the same currency, say USD. It was thought from the beginning that such effect must be temporal and exchange rates have to converge towards equilibrium where Big Mac prices equalize. Unfortunately, this do not happen, the different price levels around the world is very stable phenomena and statistically prices are higher in countries with higher incomes. This statistical phenomenon was called Penn effect and economists Balassa and Samuelson in 1964 independently explained it as a result of different productivities in tradable and not tradable sectors of the economy. The research in contemporary international macroeconomics forces us to acknowledge that this phenomenon is much more general and Balassa Samuelson effect is only one of all possible explanations.

"Money, get away. / Get a good job with good pay and you're okay. / Money, it's a gas." (Pink Floyd)

We have considered kinetic models in our few most recent texts, And we still have couple of thoughts on this topic remaining. But this time we invite you to listen to Victor Yakovenko, one of the most prominent econophysicists working on this topic. His works have attracted attention from Institute for New Economic Thinking (INET). In this video he is interviewed by Perry Mehrling of INET...

Human behavioral patterns are fascinating, we are able to behave both as individuals and as a part of society at the same time. Apparently by using human herding tendencies we could achieve significant breakthroughs! In the short talk for the ted.com website Alex Laskey describes how the behavioral science can be used to support a campaign for the energy consumption reduction.

Kinetic exchange models are very simple and powerful tool to understand the processes in the ideal gasses. These simple models enabled Boltzmann to formulate the principles of statistical physics [1, 2]. In previous text we already talked about some of the simplest models, but we did not write about a very important topic - their analytical treatment. It appears that analytical treatment is one of the most serious drawbacks of these models - in certain cases the equations become very complex or even analytically unsolvable. While, our usual approach, one-step processes (previously discussed on Physics of Risk from the point of view of the Kirman model) can be treated analytically with ease in most of the cases [3, 4]. In this text we will discuss two main techniques used to analytically obtain statistical features of the kinetic exchange models.

Few weeks ago Robert J. Shiller, laureate of Nobel prize in economics, was in Lithuania and even gave an open lecture at ISM ("openness" is rather doubtful in this case, because ordinary mortals were unable to attend). The good thing was that the lecture was broadcasted over the internet. Another good thing was that creators of "Pinigų karta" (one of the more serious TV shows about money and economics in Lithuania) invited this famous person for a brief interview and he accepted. We invite you to watch it (don't be discouraged - only first few seconds are in Lithuanian!).