 Reconsidering the Tobin TaxChapter 8 in Emerging Asia, 2011, pp 43-48 from Palgrave Macmillan Abstract: Abstract Political leaders in emerging economies who have been concerned about the volatility of capital flows have intermittently suggested a global tax on international foreign exchange (forex) activities. Such a tax was originally proposed by James Tobin in the 1970s. This “Tobin tax” is essentially a permanent, uniform, ad-valorem transactions tax on international forex flows. The burden of a Tobin tax is claimed to be inversely proportional to the length of the transaction, i.e. the shorter the holding period, the heavier the burden of tax. For instance, a Tobin tax of 0.25 percent implies that a twice daily round-trip carries an annualised rate of 365 percent; while in contrast, a round-trip made twice a year carries a rate of 1 percent. Accordingly, and considering that 80 percent of forex turnover involves round-trips of a week or less, it has been argued that the Tobin tax ought to help reduce exchange rate volatility and consequently curtail the intensity of “boom-bust” cycles caused by international capital flows. Keywords: Real Exchange Rate; Capital Flow; Capital Inflow; International Capital Flow; Excise Duty (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-0-230-30627-1_8 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Palgrave Macmillan Studies in Banking and Financial Institutions from Palgrave Macmillan |
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