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Multinational Profit Shifting and Measures Throughout Economic Accounts (307937)
Jennifer Bruner, U.S. Bureau of Economic Analysis*Dylan Rassier, U.S. Bureau of Economic Analysis
Kim Ruhl, University of Wisconsin
Keywords: national income and product accounts, multinational firms, globalization, profit shifting
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.