Macroeconomic effects of an equity transaction tax in a general-equilibrium model
نویسندگان
چکیده
The paper studies the impact of an equity transaction tax (ETT) on financial and real variables in a DSGE model with two types of financial frictions: (1) financial intermediaries facing a leverage constraint; (2) noise shocks that lead to the emergence of nonfundamental equity trade. The ETT depresses the demand for equity and hence increases the cost of capital; this then affects firms’ investment decisions. In the long run, the tax is found to be as distortive as a corporate income tax. The transaction tax also reduces volatility in financial markets, but the impact on real volatility is limited. & 2012 Elsevier B.V. All rights reserved.
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