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A Short Note on the Tobin Tax: The Costs and Benefits of a Tax on Financial Transactions

Almost each time volatility in equity, debt, or currency markets increases, there are cries to introduce a tax of financial transactions, first proposed in Tobin (1974). This tax is motivated by th ...

Author(s) :

Raman Uppal

Summary :

Almost each time volatility in equity, debt, or currency markets increases, there are cries to introduce a tax of financial transactions, first proposed in Tobin (1974). This tax is motivated by the view that the excess volatility in financial markets is the result of trading by "speculators"; thus, even a small tax on financial transactions would "throw some sand in the wheels" of financial markets, and hence, by slowing down the trading activity of speculators would reduce volatility. 

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Type : Position paper
Date : 13/07/2011
Keywords :

Regulation