IDEAS home Printed from https://ideas.repec.org/a/arp/ijefrr/2018p266-273.html
   My bibliography  Save this article

Transfer Pricing of Multinational Corporations and Macroeconomic Volatility: Evidence from the U.S

Author

Listed:
  • Patrick Ofei*

    (Zenith University College, Ghana)

  • Abieku Neizer-Ashun

    (Hampton University, Virginia)

  • George Owusu-Antwi

    (Higher Colleges of Technology, UAE)

  • Evans Darnor Maka

    (Graduate School of Public Policy, University of Tokyo, Japan)

Abstract

This paper investigates the extent of macroeconomic volatility caused by the transfer pricing behavior of multinational corporations. The study examined two possible transmission channels through which transfer pricing causes macroeconomic volatility, namely, terms of trade and budget policy channels. Using the EGARCH model with annual data on selected variables from 1980 to 2017, the paper found evidence of macroeconomic volatility caused by transfer pricing. The size of the shock from transfer pricing is high and statistically significant in the terms of trade and budget policy channels. Negative shock from multinational corporations shifting taxable income between high and low tax regimes had a larger effect than a positive shock on the country’s budget policy. The volatility caused by transfer pricing was short-lived in the terms of trade channel. However, in the budget policy channel, past volatility of transfer pricing persisted for a longer period to explain current volatility.

Suggested Citation

  • Patrick Ofei* & Abieku Neizer-Ashun & George Owusu-Antwi & Evans Darnor Maka, 2018. "Transfer Pricing of Multinational Corporations and Macroeconomic Volatility: Evidence from the U.S," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 4(8), pages 266-273, 08-2018.
    • Handle: RePEc:arp:ijefrr:2018:p:266-273
    as

    Download full text from publisher

    File URL: https://www.arpgweb.com/pdf-files/ijefr4(8)266-273.pdf
    Download Restriction: no
    File URL: https://www.arpgweb.com/?ic=journal&info=archive&journal=5&month=08-2018&issue=8&volume=4
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arp:ijefrr:2018:p:266-273. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Managing Editor (email available below). General contact details of provider: http://www.arpgweb.com/?ic=journal&journal=5&info=aims .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.