Abstract
This article addresses the question of the desirability of a tax on transactions in the securities industry. Many of the other major industrialized economies impose such a tax. In Japan, for instance, the tax raises $12 billion a year (see Roll, 1989). I propose to consider the consequences of a tax at a relatively low rate, say .5 percent to 1 percent of the value of the transactions.1
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Atkinson, A.B, and Stiglitz, J.E. “The Design of Tax Systems.” Journal of Public Economics, 1976.
—. Lectures in Public Economics. New York: McGraw Hill, 1980.
Black, Fischer. “Noise.” Journal of Finance (1986), 529–543.
DeLong, J. Bradford, Shleifer, Andrei, Summers, Lawrence H., and Robert J. Waldmann.“Noise Trader Risk in Financial Markets.” Mimeo, October 1988.
—. “The Size and Incidence of the Losses from Noise Trading.” NBER Discussion Paper, March 1989.
Edwards, Franklin R. “Policies to Curb Stock Market Volatility.” Center for the Study of Futures Markets, Columbia University, Working Paper 176, August 1988.
French, Kenneth and Roll, Richard. “Stock Return Variances: The Arrival of Information and the Reaction of Traders.” Journal of Financial Economics (1987), 5–26.
Gale, I. and Stiglitz, J.E. “Futures Markets Are Almost Always Informationally Inefficient.” Princeton University Financial Research Center Memorandum No. 57, February 1985.
Greenwald, B. and Stiglitz, J.E. “Externalities in Economies with Imperfect Information and Incomplete Markets.” Quarterly Journal of Economics (May 1986), 229–264.
Greenwald, B. and Stiglitz, J.E. “Imperfect Information, Credit Markets and Unemployment.” European Economic Review 31 (1987a), 444–456.
—. “Keynesian, New Keynesian and New Classical Economics.” Oxford Economic Papers 39 (1987b), 119–133.
—. “Examining Alternative Macroeconomic Theories,” Brookings Papers on Economic Activity No. 1, 207–270.
—. “Information, Finance Constraints and Business Fluctuations.” In: Meir Kohn and S.C. Tsiang, eds., Finance Constraints, Expectations and Macroeconomics. Oxford: Oxford University Press, 1988b, pp. 103–140.
Grossman, S. and Stiglitz, J.E. “Information and Competitive Price Systems.” American Economic Review 66 (May 1976), 246–253.
—. “On the Impossibility of Informationally Efficient Markets.” American Economic Review 70 (June 1980), 393–408.
Hirschliefer, J. “The Private and Social Value of Information and the Reward to Incentive Activity.” American Economic Review (September 1971), 561–574.
Jensen, Michael C. “Symposium on Some Anomalous Evidence Regarding Market Efficiency.” Journal of Financial Economics 6 (June/September 1978), 95–101.
Jordan, J.S. “On the Efficient Markets Hypothesis.” Econometrica 51(1983), 1325–1343.
Keynes, J.M. The General Theory of Employment, Interest, and Money. London: Macmillan, 1936.
Milgrom, Paul and Stokey, Nancy. “Information, Trade, and Common Knowledge.” Journal of Economic Theory26 (1982), 17–27.
Ramsey, F.P. “A Contribution to the theory of Taxation.” Economic Journal (1927), 47–61.
Roll, R., [paper presented at this conference]
Shiller, Robert J. “Do Stock Prices Move Too Much To Be Justified by Subsequent Changes in Dividends?” AER71 (June 1981), 421–436.
Stiglitz, J.E. “Perfect and Imperfect Capital Markets.” Paper presented to Econometric Society Meetings, New Orleans, December 1971.
—. “Information and Capital Markets.” In: William F. Sharpe and Cathryn Cootner, eds., Financial Economics: Essays in Honor of Paul Cootner. Englewood Cliffs, NJ: Prentice Hall, 1982a, pp. 118–158.
—. “Some Aspects of the Taxation of Capital Gains.” Journal of Public Economics 21 (July 1983), 257–294.
Stiglitz, J.E. and Weiss, A. “Banks as Social Accountants and Screening Devices for the Allocation of Credit.” NBER working paper no. 2710, September 1988.
—. Economics of the Public Sector. New York: W.W. Norton Publishers, 1986; 2d ed., 1988.
Summers, L.H. and Summers, V.P. “When Financial Markets Work Too Well: A Cautious Case for a Securities Transactions Tax.” Paper presented to the Annenberg Conference on Technology and Financial Markets, Washington, D.C., February 28, 1989.
Tirole, J. “On the Possibility of Speculation Under Rational Expectations.” Econometrica 50 (September 1982), 1163–1181.
Author information
Authors and Affiliations
Editor information
Rights and permissions
Copyright information
© 1989 Kluwer Academic Publishers
About this chapter
Cite this chapter
Stiglitz, J.E. (1989). Using Tax Policy To Curb Speculative Short-Term Trading. In: Edwards, F.R. (eds) Regulatory Reform of Stock and Futures Markets. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-2193-1_2
Download citation
DOI: https://doi.org/10.1007/978-94-009-2193-1_2
Publisher Name: Springer, Dordrecht
Print ISBN: 978-94-010-7483-4
Online ISBN: 978-94-009-2193-1
eBook Packages: Springer Book Archive