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Tobin Tax Effects Seen from the Foreign Exchange Market's Microstructure

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Author Info
Mende, Alexander
Menkhoff, Lukas

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Abstract

The Tobin tax is in high demand for many groups. Despite its popularity, research has not yet made full use of available insights from the recent microstructure literature. The role of banks in foreign exchange trading is quite different from what proponents usually assume. The most probable decisive group for shorter-term exchange rate movements is asset managers. They speculate under comparatively longer horizons than FX dealers although they also tend to behave short-termist. There is no tax rate that could influence their behavior and at the same time keep the desired high liquidity. Thus no uniform proportional Tobin tax can reach its goals.

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Publisher Info
Paper provided by Universität Hannover, Wirtschaftswissenschaftliche Fakultät in its series Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Universität Hannover with number dp-268.

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Length: 19 pages
Date of creation: Jan 2003
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Handle: RePEc:han:dpaper:dp-268

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Related research
Keywords: Tobin tax; market microstructure;

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F31 - International Economics - - International Finance - - - Foreign Exchange

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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.:
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  8. Menkhoff, Lukas, 1997. "Examining the Use of Technical Currency Analysis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 2(4), pages 307-18, October. [Downloadable!] (restricted)
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  12. John Y. Campbell & Kenneth A. Froot, 1994. "International Experiences with Securities Transaction Taxes," NBER Chapters, in: The Internationalization of Equity Markets, pages 277-308 National Bureau of Economic Research, Inc. [Downloadable!]
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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. G. Ehrenstein & F. Westerhoff & D. Stauffer, 2003. "Tobin tax and market depth," Quantitative Finance Papers cond-mat/0311581, arXiv.org. [Downloadable!]
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