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Coping with, and cashing in on, international capital volatility
Author(s) -
Bird Graham,
Rajan Ramkishen S.
Publication year - 2001
Publication title -
journal of international development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.533
H-Index - 66
eISSN - 1099-1328
pISSN - 0954-1748
DOI - 10.1002/jid.718
Subject(s) - currency , economics , tax revenue , monetary economics , volatility (finance) , finance , double taxation , revenue , macroeconomics
The political economy of currency taxation suggests that the idea will receive more support if it can be shown to make a significant contribution to offsetting the perceived inefficiencies of private international capital markets. This paper explores what can be expected from a currency tax in this respect. It shows that there are simple but neglected analytical issues that make such a tax an attractive idea. If the tax is relatively ineffective in helping to avoid financial crises and calming markets, it will be relatively effective at providing the resources necessary to mitigate the aftermath of such events. The paper offers new proposals for using the revenue from currency taxation to finance the operations of the IMF. © 2001 John Wiley & Sons, Ltd.