Open AccessMarket 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.