Measuring economic activity in the presence of superstar MNEs

Philip Economides and Giorgi Nikolaishvili ()

Economics Letters, 2023, vol. 226, issue C

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.

Keywords: Tax haven; Profit-shifting; Multinational firms; National accounting; Business cycle monitoring (search for similar items in EconPapers)
JEL-codes: C38 E01 F23 H26 O34 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:226:y:2023:i:c:s0165176523001027

DOI: 10.1016/j.econlet.2023.111077

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