The societal benefits of a financial transaction tax

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The societal benefits of a financial transaction tax

JournalArticle (Originalarbeit in einer wissenschaftlichen Zeitschrift)

ID	3693123
Author(s)	Berentsen, Aleksander; Huber, Samuel; Marchesiani, Alessandro
Author(s) at UniBasel	Berentsen, Aleksander
Year	2016
Title	The societal benefits of a financial transaction tax
Journal	European Economic Review
Volume	89
Pages / Article-Number	303-323
Keywords	Financial transaction tax; Tobin tax; Pecuniary externality; Financial intermediation
Abstract	We provide a novel justification for a financial transaction tax for economies where agents face stochastic consumption opportunities. A financial transaction tax makes it more costly for agents to readjust their portfolios of liquid and illiquid assets in response to liquidity shocks, which increase both the demand for and the price of liquid assets. The higher price improves liquidity insurance and welfare for other market participants. We calibrate the model to U.S. data and find that the optimal financial transaction tax is 1.6% and that it reduces the volume of financial trading by 17%.
Publisher	Elsevier
ISSN/ISBN	0014-2921 ; 1873-572X
URL	http://www.sciencedirect.com/science/article/pii/S0014292116301337
edoc-URL	http://edoc.unibas.ch/51966/
Full Text on edoc	No
Digital Object Identifier DOI	10.1016/j.euroecorev.2016.08.003
ISI-Number	WOS:000387194300017
Document type (ISI)	Article

15/05/2024

Research Database / FORSCHUNGSDATENBANK