Dataset Information

Market versus Residence Principle: Experimental Evidence on the Effects of a Financial Transaction Tax.

ABSTRACT: The effects of a financial transaction tax (FTT) are scientifically disputed, as seemingly small details of its implementation may matter a lot. In this article, we provide experimental evidence on the different effects of an FTT, depending on whether it is implemented as a tax on markets, on residents, or a combination of both. We find that a tax on markets has negative effects on volatility and trading volume, whereas a tax on residents shows none of these undesired effects. Additionally, we observe that individual risk attitude is not related to traders' reaction to the different forms of an FTT.

SUBMITTER: Huber J

PROVIDER: S-EPMC5698715 | biostudies-literature | 2017 Oct

REPOSITORIES: biostudies-literature

ACCESS DATA

Publications

Market <i>versus</i> Residence Principle: Experimental Evidence on the Effects of a Financial Transaction Tax.

Huber Jürgen J Kirchler Michael M Kleinlercher Daniel D Sutter Matthias M

Economic journal (London, England) 20171024 605

The effects of a financial transaction tax (FTT) are scientifically disputed, as seemingly small details of its implementation may matter a lot. In this article, we provide experimental evidence on the different effects of an FTT, depending on whether it is implemented as a tax on markets, on residents, or a combination of both. We find that a tax on markets has negative effects on volatility and trading volume, whereas a tax on residents shows none of these undesired effects. Additionally, we o ...[more]

PMID: 29200470

Similar Datasets

Project description:BackgroundAfter achieving universal basic medical insurance coverage, Chinese government put the development of private health insurance (PHI) on its agenda to further strengthen financial risk protection. This paper aims to assess the level of financial protection that PHI provides for its insured households on the basis of resident basic medical insurance (RBMI).MethodsWe employed balanced panel data collected between 2015 and 2017 from the China Household Finance Survey (CHFS). Catastrophic health expenditure (CHE) and impoverishment due to health spending were applied to measure the financial protection effects. Random effects panel logistic regression model was performed to identify the factors associated with CHE and impoverishment among households covered by RBMI. In the robustness test, the method of propensity score matching (PSM) was employed to solve the problem of endogeneity.ResultsFrom 2015 to 2017, the CHE incidence increased from 12.96 to 14.68 % for all sampled households, while the impoverishment rate decreased slightly from 5.43 to 5.32 % for all sampled households. In 2015, the CHE incidence and impoverishment rate under RBMI + PHI were 4.53 and 0.72 %, respectively, which were lower than those under RBMI alone. A similar phenomenon was observed in 2017. Regression analysis also showed that the households with RBMI + PHI were significantly less likely to experience CHE (marginal effect: -0.054, 95 %CI: -0.075 to -0.034) and impoverishment (marginal effect: -0.049, 95 %CI: -0.069 to -0.028) compared to those with RBMI alone. The results were still robust after using PSM method to eliminate the effects of self-selection on the estimation results.ConclusionsIn the context of universal basic medical insurance coverage, the CHE incidence and impoverishment rate of Chinese households with RBMI were still considerably high in 2015 and 2017. PHI played a positive role in decreasing household financial risk on the basis of RBMI.

Project description:Herd behaviour in financial markets is a recurring phenomenon that exacerbates asset price volatility, and is considered a possible contributor to market fragility. While numerous studies investigate herd behaviour in financial markets, it is often considered without reference to the pricing of financial instruments or other market dynamics. Here, a trader interaction model based upon informational cascades in the presence of information thresholds is used to construct a new model of asset price returns that allows for both quiescent and herd-like regimes. Agent interaction is modelled using a stochastic pulse-coupled network, parametrised by information thresholds and a network coupling probability. Agents may possess either one or two information thresholds that, in each case, determine the number of distinct states an agent may occupy before trading takes place. In the case where agents possess two thresholds (labelled as the finite state-space model, corresponding to agents' accumulating information over a bounded state-space), and where coupling strength is maximal, an asymptotic expression for the cascade-size probability is derived and shown to follow a power law when a critical value of network coupling probability is attained. For a range of model parameters, a mixture of negative binomial distributions is used to approximate the cascade-size distribution. This approximation is subsequently used to express the volatility of model price returns in terms of the model parameter which controls the network coupling probability. In the case where agents possess a single pulse-coupling threshold (labelled as the semi-infinite state-space model corresponding to agents' accumulating information over an unbounded state-space), numerical evidence is presented that demonstrates volatility clustering and long-memory patterns in the volatility of asset returns. Finally, output from the model is compared to both the distribution of historical stock returns and the market price of an equity index option.

Dataset Information

Market versus Residence Principle: Experimental Evidence on the Effects of a Financial Transaction Tax.

Publications

Market <i>versus</i> Residence Principle: Experimental Evidence on the Effects of a Financial Transaction Tax.

Similar Datasets

OmicsDI is part of the ELIXIR infrastructure

Tweets