Market versus Residence Principle: Experimental Evidence on the Effects of a Financial Transaction Tax. (24th October 2017)

• Record Type: Journal Article
• Authors: Huber, Jürgen; Kirchler, Michael; Kleinlercher, Daniel; Sutter, Matthias
• Is Part Of: Economic journal. Volume 127:Number 605(2017)
• Page Start: F610
• Page End: F631
• Publication Date: 2017-10-24
• Subjects: Economics -- Periodicals; Économie politique -- Périodiques; 330.05
• DOI: 10.1111/ecoj.12339
• Languages: English
• ISSNs: 0013-0133

Abstract

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.