Should speculators be taxed?
Subject
Finance
Publishing details
IFA Working Paper
Authors / Editors
Dow J;Rahi R
Biographies
Publication Year
2000
Abstract
A number of economists have supported the taxation of speculation in financial markets. We examine the welfare economics of such a tax in a model of trading in a financial market where some agents have superior information. We show that in some cases a tax on spectators' benefit from less informative prices offsets the costs of the tax. The effect on the welfare of other agents depends on how revelation of information changes risk-sharing opportunities in the market. It is possible for the introduction of a tax to cause a Pareto improvement.
Publication Notes
Published in Journal of Business
Publication Research Centre
Institute of Finance and Accounting
Series Number
FIN 251
Series
IFA Working Paper
Available on ECCH
No
