eprintid: 16804
rev_number: 15
eprint_status: archive
userid: 2744
dir: disk0/00/01/68/04
datestamp: 2014-05-19 13:35:42
lastmod: 2015-04-23 01:00:36
status_changed: 2014-05-19 13:35:42
type: workingPaper
metadata_visibility: show
creators_name: Rieger, Jörg
title: Financial Transaction Tax and Financial Market Stability with Diverse Beliefs
subjects: 330
divisions: 181000
keywords: Transaction Tax, Financial Regulation, Heterogeneous Beliefs
abstract: 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
id_scheme: DOI
id_number: 10.11588/heidok.00016804
schriftenreihe_cluster_id: sr-3
schriftenreihe_order: 0563
ppn_swb: 165754799X
own_urn: urn:nbn:de:bsz:16-heidok-168044
language: eng
bibsort: RIEGERJORGFINANCIALT201404
full_text_status: public
series: Discussion Paper Series / University of Heidelberg, Department of Economics
volume: 0563
pages: 41
citation:   Rieger, Jörg  (2014) Financial Transaction Tax and Financial Market Stability with Diverse Beliefs.  [Working paper]     
document_url: https://archiv.ub.uni-heidelberg.de/volltextserver/16804/1/Rieger_2014_dp563.pdf