Measuring Economic Activity in the Presence of Superstar MNEs

(Accepted, Economic Letters) The Finance Act of 2015 introduced Irish residency, foreign-owned status to a number of large firms that otherwise functioned as “Stateless” while maintaining minimal effective tax rates on profits earned internationally. In tandem with this change came a +25% increase in GDP.

With these changes Irish GDP has become unpredictable, national accounting workarounds seem to be inadequate and a lack of vision of domestic activity available to policymakers hampers countercyclical fiscal action.

We seek to address these issues by calibrating a dynamic factor model that can separately identify domestic economic activity and this distortionary foreign-owned superstar firm activity. More details to come over Summer 2021.

Philip Economides
Philip Economides
PhD Candidate, Economics

My research focuses on maritime trade and transport, MNE activities and trade barriers.