Kenneth Rogoff on Tobin taxes

Ken Rogoff has a great article in The Guardian on financial transaction taxes (FTTs). Sometimes people refer to FTTs as Tobin taxes, after an early advocate. They’ve had a fair bit of airtime from people recently, including Bernie Sanders. Rogoff explains why they might not work as well as people hope, in The overselling of financial transaction taxes:

The fundamental problem with FTTs is that they are distortionary; for example, by driving down stock prices, they make raising capital more expensive for firms. In the long run, this lowers labour productivity and wage levels.