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Securities Transaction Taxes for U.S. Financial Markets

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Author Info
Robert Pollin () (Department of Economics and Political Economy Research Institute (PERI), University of Massachusetts, Amherst)
Dean Baker (Center for Economic and Policy Research (CEPR))
Marc Schaberg

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Abstract

This paper examines the viability of security transaction excise taxes (STETs) as one policy tool for promoting a more stable financial environment, specifically with respect to the U.S. economy. Contrary to a large recent critical literature, we show that a STET can be designed without creating large distortions between segments of the financial market. We also show that a modest STET for the U.S.—beginning with a 0.5 percent tax on equity trades and scaled appropriately for other financial instruments—would generate substantial new government revenues, on the order of $100 billion per year.

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File URL: http://college.holycross.edu/eej/Volume29/V29N4P527_558.pdf
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Publisher Info
Article provided by Eastern Economic Association in its journal Eastern Economic Journal.

Volume (Year): 29 (2003)
Issue (Month): 4 (Fall)
Pages: 527-558
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Handle: RePEc:eej:eeconj:v:29:y:2003:i:4:p:527-558

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Related research
Keywords: Financial Market Securities

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Find related papers by JEL classification:
F3 - International Economics - - International Finance
G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
G12 - Financial Economics - - General Financial Markets - - - Asset Pricing

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. James Tobin, 1978. "A Proposal for International Monetary Reform," Eastern Economic Journal, Eastern Economic Association, vol. 4(3-4), pages 153-159, Jul/Oct. [Downloadable!]
    Other versions:
  2. Summers, L.H. & Summers, V.P., 1989. "When Financial Markets Work Too Well : A Cautious Case For A Securities Transactions Tax," Papers t12, Columbia - Center for Futures Markets.
  3. Eichengreen, Barry & Tobin, James & Wyplosz, Charles, 1995. "Two Cases for Sand in the Wheels of International Finance," Economic Journal, Royal Economic Society, vol. 105(428), pages 162-72, January. [Downloadable!] (restricted)
    Other versions:
  4. Roll, R., 1989. "Price Volatility, International Market Links, And Their Implications For Regulatory Policies," Papers t10, Columbia - Center for Futures Markets.
  5. Donald B. Keim & Ananth Madhavan, . "The Cost of Institutional Equity Trades," Rodney L. White Center for Financial Research Working Papers 8-98, Wharton School Rodney L. White Center for Financial Research.
    Other versions:
  6. repec:fth:pennfi:68 is not listed on IDEAS
  7. Subrahmanyam, Avanidhar, 1998. "Transaction Taxes and Financial Market Equilibrium," Journal of Business, University of Chicago Press, vol. 71(1), pages 81-118, January. [Downloadable!] (restricted)
  8. Stiglitz, J.E., 1989. "Using Tax Policy To Curb Speculative Short-Term Trading," Papers t2, Columbia - Center for Futures Markets.
  9. Avanidhar Subrahmanyam, 1989. "Price Volatility, International Market Links and their Implications for Regulatory Policies," University of California at Los Angeles, Anderson Graduate School of Management 1188, Anderson Graduate School of Management, UCLA. [Downloadable!]
  10. Ananth Madhavan & Matthew Richardson & Mark Roomans, 1996. "Why Do Security Prices Change? A Transaction-Level Analysis of NYSE Stocks," New York University, Leonard N. Stern School Finance Department Working Paper Seires 96-34, New York University, Leonard N. Stern School of Business-.
    Other versions:
  11. Philip Arestis & Panicos O. Demetriades & Kul B. Luintel, 1997. "Financial Development and Economic Growth: the Role of Stock Markets," Keele Department of Economics Discussion Papers (1995-2001) 97/05, Department of Economics, Keele University.
    Other versions:
  12. Umlauf, Steven R., 1993. "Transaction taxes and the behavior of the Swedish stock market," Journal of Financial Economics, Elsevier, vol. 33(2), pages 227-240, April. [Downloadable!] (restricted)
  13. Jones, Charles M & Seguin, Paul J, 1997. "Transaction Costs and Price Volatility: Evidence from Commission Deregulation," American Economic Review, American Economic Association, vol. 87(4), pages 728-37, September. [Downloadable!] (restricted)
  14. Davidson, Paul, 1997. "Are Grains of Sand in the Wheels of International Finance Sufficient to Do the Job When Boulders Are Often Required?," Economic Journal, Royal Economic Society, vol. 107(442), pages 671-86, May. [Downloadable!] (restricted)
  15. Steven M. Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1988. "Financing Constraints and Corporate Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1988-1), pages 141-206. [Downloadable!]
    Other versions:
  16. John Y. Campbell & Kenneth A. Froot, 1993. "International Experiences with Securities Transaction Taxes," NBER Working Papers 4587, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  17. Brorsen, W., 1989. "Futures Trading, Transaction Costs, And Stock Market Volatility," Papers 188, Columbia - Center for Futures Markets.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Anna M.Variato, 2003. "The Keynesian Root of the Tobin tax," Working Papers 0305, University of Bergamo, Department of Economics. [Downloadable!]
  2. Robert Pollin, 2002. "Globalization and the Transition to Egalitarian Development," Working Papers wp42, Political Economy Research Institute, University of Massachusetts at Amherst. [Downloadable!]
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