Berentsen, Aleksander and Huber, Samuel and Marchesiani, Alessandro. (2016) The societal benefits of a financial transaction tax. European Economic Review, 89. 303 -323.
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Official URL: http://edoc.unibas.ch/51966/
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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%.
| Faculties and Departments: | 06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Wirtschaftstheorie (Berentsen) |
|---|---|
| UniBasel Contributors: | Berentsen, Aleksander |
| Item Type: | Article, refereed |
| Article Subtype: | Research Article |
| Publisher: | Elsevier |
| ISSN: | 0014-2921 |
| e-ISSN: | 1873-572X |
| Note: | Publication type according to Uni Basel Research Database: Journal article |
| Related URLs: | |
| Identification Number: | |
| Last Modified: | 22 Nov 2018 14:56 |
| Deposited On: | 05 May 2017 10:38 |
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