The economic consequences of a Tobin tax--An experimental analysis

Michael Hanke, Jürgen Huber, Michael Kirchler and Matthias Sutter

Journal of Economic Behavior & Organization, 2010, vol. 74, issue 1-2, 58-71

Abstract: The effects of a Tobin tax on foreign exchange markets have long been disputed. We present an experiment with currency trading on two markets, where either none, one, or both markets are taxed. Our results confirm the hitherto undisputed issues: a tax reduces trading volume, shifts market share to untaxed markets, and leads to negligible tax revenues if tax havens exist. Concerning the controversial issues we find that (i) volatility effects depend on the existence of tax havens and on market size, (ii) market efficiency decreases in taxed markets when tax havens exist, and (iii) short-term speculation is reduced.

Keywords: Tobin; tax; Experiment; Foreign; exchange; Market; efficiency; Trading; volume; Volatility (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (38)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167-2681(10)00024-7
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The economic consequences of a Tobin tax - An experimental analysis (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:74:y:2010:i:1-2:p:58-71

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().