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Financial transaction taxes and expert advice

Author

Listed:
  • Michele Dell´Era

    (European Business School Paris)

Abstract

This note uses strategic communication to study the impact of a financial transaction tax on expert advice to traders. The central finding is that the tax worsens expert advice by strengthening experts' incentives to misreport information. Such negative tax impact is moderated by expert commissions and exacerbated by uncertainty. Expert advice thus emerges as a new channel through which the tax makes traders less informed. This result advances the debate on tax suitability beyond the conventional arguments.

Suggested Citation

  • Michele Dell´Era, 2022. "Financial transaction taxes and expert advice," Economics Bulletin, AccessEcon, vol. 42(4), pages 2024-2033.
    • Handle: RePEc:ebl:ecbull:eb-22-00407
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2022/Volume42/EB-22-V42-I4-P167.pdf
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    References listed on IDEAS

    as
    1. Thomas Palley, 1999. "Speculation and Tobin taxes: Why sand in the wheels can increase economic efficiency," Journal of Economics, Springer, vol. 69(2), pages 113-126, June.
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    More about this item

    Keywords

    Financial Transaction Tax; Expert Advice; Externality; Informational Efficiency; Tax Distortion; Expert Compensation;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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