Speculation and Tobin taxes: Why sand in the wheels can increase economic efficiency

@article{Palley1999SpeculationAT,
  title={Speculation and Tobin taxes: Why sand in the wheels can increase economic efficiency},
  author={Thomas Palley},
  journal={Journal of Economics},
  year={1999},
  volume={69},
  pages={113-126}
}
  • T. Palley
  • Published 1 June 1999
  • Economics
  • Journal of Economics
The current paper develops the microeconomic case for a Tobin tax. It combines the noise-trader literature with the Tobin-tax-policy literature. Noise traders cause economic losses by inappropriately cashing out their investments. A Tobin tax can reduce such activity, thereby conferring a benefit on fundamentals investors. The paper identifies the conditions under which these gains would be largest and provides guidelines as to whether a tax is warranted. There is a trade-off because Tobin… 

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