title: Financial Transaction Tax and Financial Market Stability with Diverse Beliefs
creator: Rieger, Jörg
subject: 330
subject: 330 Economics
description: This papers studies the impact of a financial transactions tax on the trading volume and asset price volatility in a model with heterogeneous beliefs. To model heterogeneous beliefs we follow Kurz (1994, 1997) and restrict the class of beliefs to the subset of rational beliefs. We study a tax on bond and asset purchases. The simulated model shows that the introduction of a transaction tax results in a lower trading volume and therefore in less liquid financial markets. Because of the decreased liquidity the volatility of the stock market increases. We also study the welfare effects of a financial transaction tax and the simulation results also show that there is only a small change in welfare.
date: 2014-04
type: Working paper
type: info:eu-repo/semantics/workingPaper
type: NonPeerReviewed
format: application/pdf
identifier: https://archiv.ub.uni-heidelberg.de/volltextserverhttps://archiv.ub.uni-heidelberg.de/volltextserver/16804/1/Rieger_2014_dp563.pdf
identifier: DOI:10.11588/heidok.00016804
identifier: urn:nbn:de:bsz:16-heidok-168044
identifier:   Rieger, Jörg  (2014) Financial Transaction Tax and Financial Market Stability with Diverse Beliefs.  [Working paper]     
relation: https://archiv.ub.uni-heidelberg.de/volltextserver/16804/
rights: info:eu-repo/semantics/openAccess
rights: http://archiv.ub.uni-heidelberg.de/volltextserver/help/license_urhg.html
language: eng