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Taxing Emerging Stock Markets: A Beneficial Policy? Evidence from the Stockholm Stock Exchange, 1907-1939

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  • Waldenstrom, Daniel

Abstract

The question of whether financial markets should be taxed or not has been extensively debated. In this study, the gradual rise in public taxation of the Stockholm Stock Exchange during the first half of the 20th century is examined and evaluated. Our empirical findings focusing on trading volume and volatility show that transaction taxes caused substantial crowding out of trading activity and led to lower asset prices. Hence, some support is given to the proponents of a more cautious financial market taxation.
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  • Waldenstrom, Daniel, 2002. "Taxing Emerging Stock Markets: A Beneficial Policy? Evidence from the Stockholm Stock Exchange, 1907-1939," Explorations in Economic History, Elsevier, vol. 39(1), pages 29-45, January.
  • Handle: RePEc:eee:exehis:v:39:y:2002:i:1:p:29-45
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    References listed on IDEAS

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    1. 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.
    2. Aggarwal, Reena & Inclan, Carla & Leal, Ricardo, 1999. "Volatility in Emerging Stock Markets," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 34(01), pages 33-55, March.
    3. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    4. Victoria Saporta & Kamhon Kan, 1997. "The effects of Stamp Duty on the Level and Volatility of Equity Prices," Bank of England working papers 71, Bank of England.
    5. 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.
    6. Stiglitz, J.E., 1989. "Using Tax Policy To Curb Speculative Short-Term Trading," Papers t2, Columbia - Center for Futures Markets.
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    Cited by:

    1. Waldenström, Daniel, 2014. "Swedish Stock and Bond Returns, 1856–2012," Working Paper Series 1027, Research Institute of Industrial Economics.

    More about this item

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-

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