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

Huber Jürgen | Zendy; Kirchler Michael | Zendy; Kleinlercher Daniel | Zendy; Sutter Matthias | Zendy

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

Author(s) -

Huber Jürgen,

Kirchler Michael,

Kleinlercher Daniel,

Sutter Matthias

Publication year - 2017

Publication title -

the economic journal

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 4.683

H-Index - 160

eISSN - 1468-0297

pISSN - 0013-0133

DOI - 10.1111/ecoj.12339

Subject(s) - database transaction , volatility (finance) , economics , residence , transaction cost , monetary economics , financial market , financial transaction , financial economics , public economics , business , microeconomics , finance , demographic economics , computer science , programming language

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.

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