A research note published today by the ESRI (Economic and Social Research Institute) suggests that quarterly national accounts data volatility hinders Irish economic forecasting but the paper avoids referring directly to tax avoidance, which is the main causal factor.
"Irish Quarterly Macroeconomic Data, A Volatility Analysis", by Niall Conroy, a researcher at the ESRI, highlights the difficulties faced by forecasters and policymakers when examining changes in the Quarterly National Accounts
The paper says that the Quarterly National Accounts released by the Central Statistics Office (CSO) provide the most comprehensive estimates of Irish economic activity. However, it highlights the volatility in quarter to quarter changes in GDP and GNP. The measured volatility reflects both the underlying volatility in the Irish economy, "but also the difficulty in measuring economic output in a small open economy."
Commenting on the analysis, Niall Conroy, the author, said “Today’s note shows that the volatility in quarterly GNP and GDP in Ireland is amongst the highest in the OECD. We can also see that the high levels of volatility are evident in several sectors of the economy, particularly those with a strong multi-national corporation presence.”
He continued, "While the rate of volatility in quarterly GNP and GDP has been highlighted previously, we can see that volatility is at its highest at potential turning points in the economy. This highlights the difficulties faced by forecasters and policymakers when examining changes in the Quarterly National Accounts.”
In the research note Conroy says that the volatility in the national accounts is no longer solely due to activities in the manufacturing sector. "It is noticeable however, that the two sectors most responsible for the high levels of
Conroy refers to a paper that was produced by John FitzGerald in 2013 on redomiciled PLCs, which shows that both GNP and the Balance of Payments is distorted by these faux-Irish companies.
Finfacts Sept 2014: The idiot/ eejit's guide to distorted Irish national economic data
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