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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/61018
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| Title: | | On the incidence of a financial transactions tax in a model with fire sales  |
| Authors: | | Bierbrauer, Felix |
| Issue Date: | | 2012 |
| Series/Report no.: | | CESifo Working Paper: Public Finance 3870 |
| Abstract: | | This paper studies the impact of a financial transactions tax on a financial market where financial institutions trade with each other. Assets are marked to the market and financial institutions with negative equity are forced out of business. There are two main results: First, if all banks have enough liquidity so that they can honor their short-term obligations, a financial transactions tax is entirely neutral. Second, in a model with correlated investment risk and short-term financing of banks, a financial transactions tax contributes to financial distress and undoes other policy measures that are used to stabilize financial markets. |
| Subjects: | | financial transactions tax financial stability financial markets cash-in-the-market-pricing marking-to-market |
| JEL: | | H22 G18 G21 G28 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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