IDEAS home Printed from https://ideas.repec.org/p/trb/wpaper/1998.04.html
   My bibliography  Save this paper

Why Tax Foreign Exchange? Comments on a Proposed Tobin Tax

Author

Listed:
  • Mardi H Dungey

    (School of Economics, La Trobe University)

Abstract

At various times since Tobin floated the idea of a tax on foreign exchange transactions the concept has been revisited - particularly in times of financial market turmoil when it has been proposed as a means of reducing exchange rate volatility. Recently, Harcourt (1997) suggested a further refinement of the Tobin tax to apply only to 'speculative transactions'. This paper identifies three types of foreign exchange transactions - informed trades, liquidity trades and speculative trades - and highlights the difficulties in differentiating between these types of transactions. It is not clear whether some (or what) proportion of speculative trades is of benefit to the economy. Further, the undesirability of exchange rate volatility itself has not been established. In particular, the costs and benefits of exchange rate volatility have not been compared with the alternatives of interest rate volatility under a fixed exchange rate regime or the market innovations resulting from the imposition of a Tobin tax.

Suggested Citation

  • Mardi H Dungey, 1998. "Why Tax Foreign Exchange? Comments on a Proposed Tobin Tax," Working Papers 1998.04, School of Economics, La Trobe University.
    • Handle: RePEc:trb:wpaper:1998.04
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    More about this item

    Keywords

    Taxes; Financial Market;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:trb:wpaper:1998.04. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stephen Scoglio (email available below). General contact details of provider: https://edirc.repec.org/data/sblatau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.