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Measuring economic activity in the presence of superstar MNEs

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  • Economides, Philip
  • Nikolaishvili, Giorgi

Abstract

In 2015, changes to Irish tax legislation coincided with a 26% annual increase in real gross domestic product, driven by the presence of multinational enterprises (MNEs). We provide a method of statistically isolating variation in GDP growth attributable solely to domestic activity. Our findings imply a 21% lower level of GDP relative to the official measure recorded for 2020. We recommend our methodology to policymakers in economies where profit-shifting MNE activities introduce challenges to business cycle and fiscal monitoring.

Suggested Citation

  • Economides, Philip & Nikolaishvili, Giorgi, 2023. "Measuring economic activity in the presence of superstar MNEs," Economics Letters, Elsevier, vol. 226(C).
    • Handle: RePEc:eee:ecolet:v:226:y:2023:i:c:s0165176523001027
    DOI: 10.1016/j.econlet.2023.111077
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    References listed on IDEAS

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    1. Stefan Avdjiev & Mary Everett & Philip R Lane & Hyun Song Shin, 2018. "Tracking the international footprints of global firms," BIS Quarterly Review, Bank for International Settlements, March.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Tax haven; Profit-shifting; Multinational firms; National accounting; Business cycle monitoring;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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