The Tobin Tax: Coping with Financial Volatility

by Mahbub ul Haq, Inge Kaul, Isabelle Grunberg

Overview

In his 1972 Janeway Lectures at Princeton, James Tobin, the 1981 Nobel Prize winner for economics, submitted a proposal for a levy on international currency transactions. The idea was not greeted with enthusiasm, as the 1970s were a period of optimism and confidence in floating exchange rages. Yet, whenever currency crises erupted during the past decades, the proposal for a levy on international currency transactions would once again arise. In the 1990s, two additional facts have sharpened interest in the Tobin tax proposal. First is the growing volume of foreign exchange trading. Second, interest is coming not only from policymakers and experts concerned with the smooth functioning of financial markets. It is shared by those concerned with public financing of development—the fiscal crisis of the state as well as the growing need for international cooperation on problems such as the environment, poverty, peace and security.

This work makes a systematic analysis of the proposal for a foreign exchange transactions levy. Its chapters examine the economic desirability of such a levy, its technical and political feasibility, its revenue potential, the possible uses of that revenue, and related administrative and institutional aspects.

Product Details

ISBN-13:	9780195111804
Publisher:	Oxford University Press
Publication date:	07/11/1996
Pages:	336
Product dimensions:	6.38(w) x 9.56(h) x 1.08(d)
Lexile:	1500L (what's this?)

About the Author

Human Development Center, Islamabad

United Nations Development Programme, NY

United Nations Development Programme, NY

Table of Contents

	Acknowledgements	vii
	Prologue	ix
	Overview	1
	The Tobin Tax as an Instrument of Global Monetary Policy
1.	Taxing International Financial Transactions to Enhance the Operation of the International Monetary System	15
2.	How Well Do Markets Work: Might a Tobin Tax Help?	41
3.	The Tobin Tax: Good Theory, Weak Evidence, Questionable Policy	83
	Technical Feasibility and Implementation
4.	The Feasibility of Taxing Foreign Exchange Transactions	109
5.	Issues of Enforcement and Evasion in a Tax on Foreign Exchange Transactions	129
6.	Institutional Arrangements for a Tax on International Currency Transactions	143
	Lessons from Individual Country Experiences
7.	Managing Capital Inflows in Latin America	161
8.	The Republic of Korea's Experience with Managing Foreign Capital Flows	193
	Revenue Raised by the Tobin Tax
9.	On the Revenue Potential and Phasing in of the Tobin Tax	223
10.	Potential Uses of the Revenue from a Tobin Tax	255
	Conclusion: The Tobin Tax: What Have We Learned?	273
	Statistical Appendix	289
	About the Contributors	301
	Further Reading on the Tobin Tax	307
	Index	309

Editorial Reviews

"The Tobin Tax is a superb overview of the issues surrounding the management of FX markets in an era when the speculative pressures in such markets are large and growing. ..Given the breadth of the perspectives and the quality of the essays, this book will be essential reading for anyone interested in the management of the world's FX markets, independent of their positions on any of the specific proposals."—Journal of Economic Issues

From the Publisher