Cont-Bouchaud percolation model including Tobin tax
The Tobin tax is an often discussed method to tame speculation and get a source of income. The discussion is especially heated when the financial markets are in crisis. In this article we refer to foreign exchange markets. The Tobin tax should be a small international tax affecting all currency transactions and thus consequently reducing the destabilizing speculations. In this way this tax should take over a control function. By including Tobin tax in the microscopic model of Cont and Bouchaud one finds that Tobin tax could be the right method to control foreign exchange operations and get a good source of income
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- Rama Cont & Jean-Philippe Bouchaud, 1997. "Herd behavior and aggregate fluctuations in financial markets," Science & Finance (CFM) working paper archive 500028, Science & Finance, Capital Fund Management.
- Thomas Palley, 2001. "Destabilizing Speculation and the Case for an International Currency Transactions Tax," Challenge, M.E. Sharpe, Inc., vol. 44(3), pages 70-89, May.
- Cont, Rama & Bouchaud, Jean-Philipe, 2000. "Herd Behavior And Aggregate Fluctuations In Financial Markets," Macroeconomic Dynamics, Cambridge University Press, vol. 4(02), pages 170-196, June.