A General Financial Transaction Tax: A Short Cut of the Pros, the Cons and a Proposal

The idea of introducing a general financial transaction tax (FTT) has recently attracted rising attention. There are three reasons for this interest: First, the economic crisis was deepened by the instability of stock prices, exchange rates and commodity prices. This instability might be dampened by such a tax. Second, as a consequence of the crisis, the need for fiscal consolidation has tremendously increased. A FTT would provide governments with substantial revenues. Third, the dampening effects of a FTT on the real economy would be much smaller as compared to other tax measures like increasing the VAT. The paper summarises at first the six main arguments in favour and against a FTT. It then provides empirical evidence about the movements of the most important asset prices. These observations suggest that a small FTT (between 0.1 and 0.01 percent) would mitigate price volatility not only over the short run but also over the long run. At the same time, a FTT would yield substantial revenues. For Europe, revenues would amount to 1.6 percent of GDP at a tax rate of 0.05 percent (transaction volume is assumed to decline by roughly 65 percent at this rate). In the UK, tax receipts would be highest. Even if only transactions on exchanges are taxed in a first step (at a rate of 0.05 percent), a FTT would yield 3.6 percent of GDP in the UK. In Germany, FTT receipts would amount to 0.9 percent of GDP in this case. If a FTT is introduced in the UK and in Germany at the same time, neither country needs to fear a significant "emigration" of trading. This can be presumed because roughly 97 percent of all transactions on exchanges in the EU are carried out in these two countries

China demand regime

Data and Eview cod

The deregulation of employment and finance. The Big Three in crisis

Abstract American carmakers were not unfortunate victims of some financial crisis that got in the way of their recovery. Quite the contrary, they were direct contributors to their own problems, first and foremost through their adherence to "new economy" precepts and efforts to implement its recipes. The question is whether they ever had an alternative. Some have said that the demise of America's three leading automakers (General Motors, Ford and Chrysler; referred to hereafter as the "Big Three") can be explained by a financial crisis that has revealed the inadequacy of the companies' cost-cutting and profit adaptation efforts. The parties responsible for this disaster are generally considered to be arrogant executives and inflexible unions focused solely on members' interests. If this were true, however, it is hard to see how the Big Three were able to make profits between 1983 and 2000 (asides from a temporary downturn in 1991-1992) nor how, in the new millennium, they made money in [2003][2004][2005]. The standard explanation also does not explain Ford and General Motors's good performance in Latin America and China since 2004 (Jetin, 2009), nor why GM, which basically had no presence in the Chinese market in 2000, has since become the leader there. The real questions are how GM achieved this remarkable success in a -and how to explain that a company widely acclaimed as a universal model for more than 30 years now -Toyota -has spilled so much red ink over the past two years, largely due to losses in the American market (Freyssenet 2009)

Income Distribution and Growth: A Global Model

This paper estimates the effects of a change in the wage share on growth at global level in the G20 countries. A decrease in the wage share in isolation leads to lower growth in the euro area, Germany, France, Italy, the UK, the US, Japan, Turkey, and South Korea, whereas it stimulates growth in Canada, Australia, Argentina, Mexico, China, India, and South Africa. However, a simultaneous decline in the wage share in all these countries leads to a decline in global growth. Furthermore, Canada, Argentina, Mexico, and India also experience negative effects on growth when they decrease their wage share along with their trading partners. The results indicate that the global decline in labour share has had significant negative effects on growth