1. Speculative investors and transactions tax: evidence from the housing market
- Author
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Fu, Yuming, Qian, Wenlan, and Yeung, Bernard
- Subjects
Dwellings -- Taxation -- Prices and rates -- Analysis ,Housing -- Taxation -- Prices and rates -- Analysis ,Tax-free exchanges -- Analysis ,Transaction costs -- Analysis ,Company pricing policy ,Business, general ,Business - Abstract
This paper examines the impact of a policy change in transaction tax on speculators. The policy intervention took place in Singapore's housing market; it effectively raised the transaction cost in a segment favored by short-term speculators. Relative to the unaffected control sample, we find that the rise in transaction cost, equivalent to a two- to three-percentage-point increase in transaction tax, reduced speculative trading in the treatment segment by 75% and raised its price volatility by 18%. It also significantly reduced price informativeness. We further show that the results are likely due to a relatively greater withdrawal by informed speculators than by destabilizing speculators following the transaction cost increase. Keywords: transaction tax; volatility; speculators; informed traders; noise traders; housing market History: Received November 7, 2014; accepted May 5, 2015, by Amit Seru, finance. Published online in Articles in Advance December 16, 2015., 1. Introduction After the global financial crisis, the Tobin tax as a form of financial transaction tax has drawn much attention. On December 11, 2009, the Financial Times reported that [...]
- Published
- 2016
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