BAD taxation: Disintermediation and illiquidity in a bank account debits tax model
This paper uses a dynamic general equilibrium model to study the economic effects of bank account debits (BAD) taxation. Australia and various Latin American countries have levied or levy BAD taxes. Aspects such as financial disintermediation, market illiquidity, and impacts on dividend and interest rates are considered. Part of the BAD tax revenue may be fictitious, due to increased interest payments on government debt. The Brazilian BAD tax (CPMF) experience is evaluated. The empirical analysis confirms some theoretical predictions. Incidence base over GDP appears to be sensitive to the tax rate, possibly engendering a Laffer curve. The tax may also cause real interest rates to increase. Furthermore, the deadweight losses are relatively large, even if revenues are small. The theoretical and empirical results suggest that the BAD tax is not adequate for revenue collection. Copyright Springer Science + Business Media, LLC 2006
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
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.:
- Barry Eichengreen, James Tobin, and Charles Wyplosz., 1994.
"Two Cases for Sand in the Wheels of International Finance,"
Center for International and Development Economics Research (CIDER) Working Papers
C94-045, University of California at Berkeley.
- 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.
- 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.
- Isaias Coelho & Victoria P. Summers & Liam P. Ebrill, 2001. "Bank Debit Taxes in Latin America; An Analysis of Recent Trends," IMF Working Papers 01/67, International Monetary Fund.
- Edgar L. Feige, 2000.
"Taxation for the 21st century: the automated payment transaction (APT) tax,"
CEPR;CES;MSH, vol. 15(31), pages 473-511, October.
- Edgar L. Feige, 2001. "Taxation for the 21st Century: The Automated Payment Transaction (APT) Tax," Public Economics 0106001, EconWPA.
- Jeffrey A. Frankel, 1996.
"How Well do Foreign Exchange Markets Function: Might a Tobin Tax Help?,"
NBER Working Papers
5422, National Bureau of Economic Research, Inc.
- Jeffrey Frankel., 1995. "How Well Do Foreign Exchange Markets Function: Might a Tobin Tax Help?," Center for International and Development Economics Research (CIDER) Working Papers C95-058, University of California at Berkeley.
- 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.
- Lastrapes, William D. & Selgin, Grorge, 1997. "The Check Tax: Fiscal Folly and the Great Monetary Contraction," The Journal of Economic History, Cambridge University Press, vol. 57(04), pages 859-878, December.
- Garber, Peter & Taylor, Mark P, 1995. "Sand in the Wheels of Foreign Exchange Markets: A Sceptical Note," Economic Journal, Royal Economic Society, vol. 105(428), pages 173-80, January.
- Pedro H. Albuquerque & Solange Gouvea, 2005.
"Canaries and Vultures: A Quantitative History of Monetary Mismanagement in Brazil,"
Development and Comp Systems
- Albuquerque, Pedro H. & Gouvea, Solange, 2009. "Canaries and vultures: A quantitative history of monetary mismanagement in Brazil," Journal of International Money and Finance, Elsevier, vol. 28(3), pages 479-495, April.
- Craig S. Hakkio, 1994. "Should we throw sand in the gears of financial markets?," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 17-30.
- Schwert, G William, 1989.
"Tests for Unit Roots: A Monte Carlo Investigation,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 7(2), pages 147-59, April.
- James Tobin, 1978.
"A Proposal for International Monetary Reform,"
Cowles Foundation Discussion Papers
506, Cowles Foundation for Research in Economics, Yale University.
- Kenneth D. West, 1989.
"The Sources of Fluctuations in Aggregate Inventories and GNP,"
NBER Working Papers
2992, National Bureau of Economic Research, Inc.
- West, Kenneth D, 1990. "The Sources of Fluctuations in Aggregate Inventories and GNP," The Quarterly Journal of Economics, MIT Press, vol. 105(4), pages 939-71, November.
- Banerjee, Anindya & Lumsdaine, Robin L & Stock, James H, 1992.
"Recursive and Sequential Tests of the Unit-Root and Trend-Break Hypotheses: Theory and International Evidence,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 10(3), pages 271-87, July.
- Anindya Banerjee & Robin L. Lumsdaine & James H. Stock, 1990. "Recursive and Sequential Tests of the Unit Root and Trend Break Hypothesis: Theory and International Evidence," NBER Working Papers 3510, National Bureau of Economic Research, Inc.
- Stiglitz, J.E., 1989. "Using Tax Policy To Curb Speculative Short-Term Trading," Papers t2, Columbia - Center for Futures Markets.
- Janet Gale Stotsky & Parthasrathi Shome, 1995. "Financial Transactions Taxes," IMF Working Papers 95/77, International Monetary Fund.
- 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.
- Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production: I--Production Efficiency," American Economic Review, American Economic Association, vol. 61(1), pages 8-27, March.
When requesting a correction, please mention this item's handle: RePEc:kap:itaxpf:v:13:y:2006:i:5:p:601-624. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.