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Cont-Bouchaud percolation model including Tobin tax

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  • Gudrun Ehrenstein

Abstract

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

Suggested Citation

  • Gudrun Ehrenstein, 2002. "Cont-Bouchaud percolation model including Tobin tax," Papers cond-mat/0205320, arXiv.org.
  • Handle: RePEc:arx:papers:cond-mat/0205320
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    File URL: http://arxiv.org/pdf/cond-mat/0205320
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    References listed on IDEAS

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    1. 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.
    2. Thomas Palley, 2001. "Destabilizing Speculation and the Case for an International Currency Transactions Tax," Challenge, Taylor & Francis Journals, vol. 44(3), pages 70-89.
    3. 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.
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    Cited by:

    1. Sandrine Jacob Leal & Mauro Napoletano, 2016. "Market Stability vs. Market Resilience: Regulatory Policies Experiments in an Agent-Based Model with Low- and High- Frequency Trading," Sciences Po publications 2016-12, Sciences Po.
    2. E. Samanidou & E. Zschischang & D. Stauffer & T. Lux, 2001. "Microscopic Models of Financial Markets," Papers cond-mat/0110354, arXiv.org.
    3. Ginestra Bianconi & Tobias Galla & Matteo Marsili, 2006. "Effects of Tobin Taxes in Minority Game markets," Papers cond-mat/0603134, arXiv.org.
    4. Hanke, Michael & Huber, Jürgen & Kirchler, Michael & Sutter, Matthias, 2010. "The economic consequences of a Tobin tax--An experimental analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 74(1-2), pages 58-71, May.
    5. Daniel Fricke & Thomas Lux, 2015. "The effects of a financial transaction tax in an artificial financial market," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 10(1), pages 119-150, April.
    6. Jürgen Huber & Michael Kirchler & Daniel Kleinlercher & Matthias Sutter, 2014. "Market vs. residence principle : experimental evidence on the effects of a financial transaction tax," Economics Working Papers ECO2014/03, European University Institute.
    7. repec:kap:compec:v:51:y:2018:i:4:d:10.1007_s10614-017-9649-9 is not listed on IDEAS
    8. Damette, Olivier, 2016. "Mixture Distribution Hypothesis And The Impact Of A Tobin Tax On Exchange Rate Volatility: A Reassessment," Macroeconomic Dynamics, Cambridge University Press, vol. 20(06), pages 1600-1622, September.
    9. Neil McCulloch & Grazia Pacillo, 2010. "The Tobin Tax A Review of the Evidence," Working Paper Series 1611, Department of Economics, University of Sussex.
    10. Bianconi, Ginestra & Galla, Tobias & Marsili, Matteo & Pin, Paolo, 2009. "Effects of Tobin taxes in minority game markets," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 231-240, May.
    11. repec:eee:ecmode:v:67:y:2017:i:c:p:307-315 is not listed on IDEAS
    12. Westerhoff, Frank H., 2004. "Greed, fear and stock market dynamics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 343(C), pages 635-642.
    13. Yang, ChunXia & Hu, Sen & Xia, BingYing, 2012. "The endogenous dynamics of financial markets: Interaction and information dissemination," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 391(12), pages 3513-3525.
    14. repec:eee:finana:v:53:y:2017:i:c:p:12-24 is not listed on IDEAS
    15. E. Samanidou & E. Zschischang & D. Stauffer & T. Lux, 2007. "Agent-based Models of Financial Markets," Papers physics/0701140, arXiv.org.

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