A Note on the Tobin Tax
AbstractThis paper clarifies why a transaction tax of the type proposed by James Tobin can have stabilizing influence in financial markets. It argues that such a tax is potentially stabilizing, not because it reduces the 'excessive' volume of transactions, but because it can slow the speed with which market traders react to price changes. To the extent that a Tobin tax causes financial market traders to delay their decisions a few "grains of sand in the wheels of international finance" can indeed be stabilizing. Whether or not that is sufficient to prevent speculative attacks on currencies is, however, a different matter.
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Bibliographic InfoPaper provided by University of Utah, Department of Economics in its series Working Paper Series, Department of Economics, University of Utah with number 2003_05.
Length: 14 pages
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Transaction tax; speculation; finance;
Find related papers by JEL classification:
- F30 - International Economics - - International Finance - - - General
- B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
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