The J.E. Cairnes School of Business and Economics and the Whitaker Institute for Innovation and Societal Change at NUI Galway will host an online event on Reconstructing the Economy of Ukraine at 6.00 p.m. (Irish time) on April 26. The event is free but registration is required. To register for the event, please go to:
The main speaker is Professor Tymofiy Mylovanov. Professor Mylovanov is the President of Kyiv School of Economics (KSE) and Associate Professor of Economics at the University of Pittsburgh. He served as Minister of Economic Development, Trade, and Agriculture in Ukraine from 2019 to 2020.
Also speaking will be Professor Barry Eichengreen. Professor Eichengreen is the George C. Pardee & Helen N. Pardee Chair and Distinguished Professor of Economics and Political Science at the University of California, Berkeley. He is a fellow of the American Academy of Arts and Sciences. He has served as a Senior Policy Advisor to the International Monetary Fund.
The event will be chaired by Dr. Edel Doherty, Lecturer in Economics at NUI Galway.
The seminar will look at the Classifications, Compilation and Outputs of the Government Accounts in CSO using quarterly government finance statistics (GFS) and annual excessive deficit procedure (EDP) data. It will expand on what the statistics tell us about the significance of the government sector in Ireland. The use of GFS and EDP data at the European Commission will be explored by speakers from DG ECFIN (European Commission Directorate‑General for Economic and Financial Affairs).
Through CSO presentations and user perspectives, this online seminar will help users to make the most of the wealth of detail in the accounts.
Speakers: Jennifer Banim, Assistant Director General – Economic Statistics, Central Statistics Office Stephen McDonagh, Central Statistics Office Norita Murphy, Central Statistics Office Tom Fitzgerald, Central Statistics Office Derek Stynes, Central Statistics Office Ingrid Toming, DG ECFIN Antonino Barbera Mazzola, DG ECFIN
exposed is Ireland to foreign shocks? Relying on residence-based measures of
foreign holdings to answer this question can be challenging. These statistics
are obscured by the vast presence of Special Purpose Entities (SPEs) in the
country. In residence-based statistics, foreign assets and liabilities are
sorted according to the residence of the immediate counterparts. Consequently,
the cross-border positions held by these Irish-resident financial
intermediaries appear in Ireland’s external balance sheet. However, these
entities frequently have no economic ties to Irish agents. Lane
(2019) notes that the large size of these holdings
imply that the positions of Irish agents are not visible in the headline data.
Such opaqueness poses an obstacle for policymakers when assessing the exposure
of the Irish economy to foreign shocks.
a foreign-owned SPE resident in Ireland whose sole purpose is to raise capital
from international investors and transfer these resources to the company’s
headquarters located abroad. Suppose this Irish-resident company sells one
billion Euros in bonds and lends one billion Euros to its parent company. Under
the residence-based approach, the bonds issued by this entity and purchased by
international investors will be recorded as Irish foreign liabilities.
Similarly, the loans sent to its home country will be booked as Irish foreign
assets. As a result, the presence of this SPE in Ireland will increase the sum
of Irish external assets and liabilities by two billion Euros. However, the
activities conducted by this company have virtually no relation to Irish
agents. In line with this example, Galstyan
et al. (2021) provide evidence of
cross-country financing happening through Irish-resident SPEs.
one could rely on consolidated-by-nationality statistics to provide a more
accurate description of Irish foreign exposure. Its key principle is to sort
foreign assets and liabilities according to the nationality of the ultimate
counterparts. In this example, such approach would imply leaving the holdings
of the SPE out of Ireland’s consolidated foreign balance sheet as these
holdings do not have Irish agents as their ultimate counterparts. By not
incorporating such holdings, the consolidated-by-nationality balance sheet
would provide a more accurate description of the foreign exposure related to
Pacheco (2021), I construct the Irish
consolidated-by-nationality foreign balance sheet for the period between 2011
and 2019. The balance sheet is constructed using a novel methodology that
builds on firm-level data.
shows the size of Ireland’s balance sheet measured by the sum of its foreign
assets and liabilities using both methodologies. The key stylized fact that
emerges from this analysis is that Ireland’s consolidated-by-nationality
foreign balance sheet is on average 46.7% smaller when compared to its
residence-based analogue. Devereux
and Yu (2020) show that international
financial integration increases the degree of cross-country contagion.
Therefore, I interpret this finding as indicating that Ireland is less exposed
to foreign shocks than what is captured by residence-based statistics.
Figure 1: Sum of Ireland’s foreign assets and liabilities
Note: This figure shows the evolution of the sum of Irish
foreign assets and liabilities. The blue line shows such sum when calculated
using the consolidated-by-nationality approach in Sanchez Pacheco (2021). The
black line comes from Lane and Milesi-Ferretti’s External Wealth of Nations
database and shows the sum when calculated using a residence-based approach.
The role of multinationals
consolidated foreign balance sheet expanded over the past ten years. What were
the key drivers behind such expansion? Figure 2 shows the evolution of Irish
consolidated foreign liabilities according to different categories. It shows
that affiliates of foreign non-financial multinational enterprises (MNEs) were
the key contributors to such expansion.
general, foreign non-bank MNEs represent the main source of Irish international
financial integration. In 2019, their activities are associated with EUR 923.2
billion in Irish foreign assets and EUR 2,172.1 billion in foreign liabilities.
Note: This figure shows the evolution of Irish
consolidated-by-nationality foreign liabilities related to each category.
Foreign companies that have changed their domicile to Ireland are excluded from
The outsized presence of U.S. MNEs in Ireland
amount, U.S. MNEs are the most relevant ones as their activities account for
over half of the Irish foreign liabilities related to foreign non-banks. Figure
3 shows Ireland’s consolidated foreign holdings related to the activities of
foreign non-banks MNEs according to the nationality of their ultimate owners. U.S.
firms are followed by German and U.K. firms in distant second and third places.
result suggests that Ireland is particularly exposed to shocks in the U.S. that
affect the global decision-making of these MNEs.
Figure 3: Ireland’s consolidated foreign assets and
liabilities related to foreign non-banks MNEs
Note: This figure shows Irish consolidated foreign assets and
liabilities related to foreign non-banks operating in Ireland for 2019. Foreign
holdings are sorted according to the ultimate counterpart countries that own
these companies operating in Ireland. These holdings are estimated using data
from Bureau van Dijk’s FAME data-set.
measures of Irish foreign holdings are obscured by the vast presence of
financial intermediaries in the country. Alternatively, I construct an estimate
of the Irish consolidated-by-nationality foreign balance sheet for the period
between 2011 and 2019. I find that Ireland’s consolidated-by-nationality
foreign balance sheet is on average 46.7% smaller than its residence-based
analogue over the sample period. This result indicates that Ireland is
significantly less exposed to foreign shocks than what is typically suggested
by residence-based statistics.
paper is part of the Consolidated Foreign
Wealth of Nations project that seeks to create publicly available estimates
of consolidated-by-nationality foreign assets and liabilities for multiple
countries. This dataset will complement the seminal External Wealth of Nations work by Lane and Milesi-Ferretti which
provides estimates of residence-based external holdings for all countries.
Contact email: email@example.com. The author would like to thank
the Irish Research Council for the financial support provided.