Multinational Profit Shifting and Measures Throughout Economic Accounts

49 Pages Posted: 22 Aug 2018

See all articles by Jennifer Bruner

Jennifer Bruner

Government of the United States of America - Bureau of Economic Analysis (BEA)

Dylan G. Rassier

Bureau of Economic Analysis

Kim J. Ruhl

New York University (NYU), Leonard N. Stern School of Business - Department of Economics

Date Written: August 2018

Abstract

Profit shifting to low-tax countries imposes challenges for the treatment of multinational enterprises in economic accounts. Using adjustments for profit shifting calculated in Guvenen et al. (2017) under an alternative measurement methodology, this paper empirically demonstrates how the effects of profit shifting cascade throughout a fully articulated set of economic accounts for the United States in 2014. We find a 1.5 percent and 3.5 percent increase in measured U.S. gross domestic product and operating surplus, respectively, and a 33.5 percent decrease in measured income receivable from the rest of world. As a result of offsetting effects, measured U.S. gross national saving decreases by 0.8 percent, and national borrowing increases by 6.9 percent. There are also potentially significant implications for analytic uses of the measures, including decreases for the labor share of income and the return on U.S. direct investment abroad and increases for the trade in services balance and the return on domestic non-financial business.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Suggested Citation

Bruner, Jennifer and Rassier, Dylan G. and Ruhl, Kim Joseph, Multinational Profit Shifting and Measures Throughout Economic Accounts (August 2018). NBER Working Paper No. w24915. Available at SSRN: https://ssrn.com/abstract=3236719

Jennifer Bruner (Contact Author)

Government of the United States of America - Bureau of Economic Analysis (BEA) ( email )

1441 L Street NW
Washington, DC 20910
United States

Dylan G. Rassier

Bureau of Economic Analysis ( email )

1441 L Street NW
Washington, DC 20910
United States

Kim Joseph Ruhl

New York University (NYU), Leonard N. Stern School of Business - Department of Economics ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
9
Abstract Views
104
PlumX Metrics