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Formulary measures for the U.S. current account: Accounting for transactions attributable to special purpose entities of multinational enterprises

Author

Listed:
  • Rassier, Dylan G.

    (Bureau of Economic Analysis)

Abstract

To better understand the role of special purpose entities (SPEs) in economic accounting statistics, international guidelines on foreign direct investment (FDI) positions and transactions recommend supplemental measures on SPEs but leave the accounting method for supplemental measures open to further research. This paper considers formulary apportionment as an accounting method for current account transactions related to FDI and for supplemental measures on SPEs, with an application for transactions in income in the U.S. current account. The empirical results reveal that formulary apportionment reduces U.S. income receipts and U.S. income payments on FDI, which yields an implied increase in U.S. gross domestic product (GDP) of 0.9 percent for the period 2005 to 2009. The results suggest that transactions attributable to non-resident SPEs have a relatively large effect on U.S. GDP while transactions attributable to resident SPEs have a relatively small effect on U.S. GDP.

Suggested Citation

  • Rassier, Dylan G., 2014. "Formulary measures for the U.S. current account: Accounting for transactions attributable to special purpose entities of multinational enterprises," Journal of Economic and Social Measurement, IOS Press, issue 4, pages 257-281.
    • Handle: RePEc:ris:iosjes:0023
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    Citations

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    Cited by:

    1. Raymond Mataloni & Kim Ruhl & Dylan Rassier & Fatih Guvenen, 2016. "Offshore Profit Shifting and Domestic Productivity Measurement," 2016 Meeting Papers 1382, Society for Economic Dynamics.
    2. Fatih Guvenen & Raymond J. Mataloni Jr. & Dylan G. Rassier & Kim J. Ruhl, 2022. "Offshore Profit Shifting and Aggregate Measurement: Balance of Payments, Foreign Investment, Productivity, and the Labor Share," American Economic Review, American Economic Association, vol. 112(6), pages 1848-1884, June.
    3. Dylan G. Rassier, 2017. "Intangible assets and transactions within multinational enterprises: implications for national economic accounts," WIPO Economic Research Working Papers 38, World Intellectual Property Organization - Economics and Statistics Division.
    4. Peter ven de Ven & Anne Harrison & Barbara Fraumeni & Dylan G. Rassier, 2017. "Improving the SNA Treatment of Multinational Enterprises," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63, pages 287-320, December.
    5. Giordano Mion & Manuel Tong Koecklin, 2021. "The Impact of Offshore Profit Shifting on the Measurement of GDP: The Case of the UK," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2021-05, Economic Statistics Centre of Excellence (ESCoE).

    More about this item

    Keywords

    National accounting; production; FDI; multinational firms; balance of payments;
    All these keywords.

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values

    Statistics

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