Taxing transactions in futures markets: Objectives and effects

In the last few years various legislative proposals have been made to impose a transaction or excise tax on securities and derivative market transactions. Although there have been considerable discussion and analysis of the wisdom of imposing such a tax on securities markets, there has been no analysis of the pros and cons of extending the tax to futures markets. This article attempts to fill this gap, first, by examining the various rationales advanced to support a tax on securities markets to determine their applicability to futures markets and, second, by analyzing the likely effects of the tax on the competitiveness and efficiency of futures markets. In addition, the revenue-raising potential of a tax on futures transactions is evaluated. I conclude that a tax on futures markets will not achieve any important social objective and will not generate much revenue.     

E–Commerce and the Australian Economy

This paper considers the likely impact of e–commerce and the Internet on the Australian economy. It surveys literature on the extent and development of e–commerce in Australia and its impact on the shape of the Australian economy. Evidence for the 'renewal' of the Australian economy is presented and examined, especially the question of whether Australia has enjoyed increases in productivity as a result of the production and/or use of new information and communications technology. Australia is seen as broadly well placed to benefit from the Internet and e–commerce. Traditionally isolated from the world's main economic centres and reliant on commodities in international trade, the advent of the Internet is ideal for a country in transition to a service–orientated, knowledge–based economy. As the composition of Australia's exports becomes more service–orientated and knowledge–intensive, traditional trading links with Europe and North America may strengthen relative to those with Asia.     

Comparative Advantage in Demand: Experimental Evidence of Preferences for Genetically Modified Food in the United States and European Union

The United States (US) exports more than US$6 billion in agricultural commodities to the European Union(EU) each year, but one issue carries the potential to diminish this trade: use of biotechnology in food production. The EU has adopted more stringent policies towards biotechnology than the US. Understanding differences in European and American policies towards genetically modified (GM) foods requires a greater understanding of consumers’ attitudes and preferences. This paper reports results from the first large‐scale, cross‐Atlantic study to analyse consumer demand for genetically modified food in a non‐hypothetical market environment. We strongly reject the frequent if convenient assumption in trade theory that consumer preferences are identical across countries: the median level of compensation demanded by English and French consumers to consume a GM food is found to be more than twice that in any of the US locations. Results have important implications for trade theory, which typically focuses on differences in specialization, comparative advantage and factor endowments across countries, and for on‐going trade disputes at the World Trade Organization.     

Tolerance for uncertainty and the growth of informationally opaque industries

Hofstede's [Hofstede, Geert H. 1980. Culture's consequences: international differences in work-related values. Thousand Oaks, CA: Sage.] cross-country psychological survey of IBM employees finds that some countries (societies) are systematically less tolerant of uncertainty, while uncertainty-tolerance is shown by some theoretic models to be essential to the growth of emerging sectors about which less is known. This paper first uses Durnev, Morck, and Yeung's [Durnev, Art, Morck, Randall, and Yeung, Bernard. 2004. Value-enhancing capital budgeting and firm-specific stock return variation. The Journal of Finance. 59(1): 65–105.] methodology to identify these informationally opaque industries. The hypothesis is then made that countries characterized by high uncertainty aversion (measured by Hofstede's indicator, and two other alternative indicators) will grow disproportionately slower in industrial sectors where information is less available. Using the Rajan and Zingales [Rajan, Raghuram G. and Zingales, Luigi. 1998. Financial Dependence and Growth. American Economic Review. Vol. 88(3): 559–586.] “difference-in-differences” methodology, which is relatively free from the endogeneity problem, the study provides robust evidence of such an industrial growth pattern in 34 countries and 36 manufacturing industries. It also shows that national uncertainty aversion is not driven by underdevelopment of financial sector, inadaptability of civil law systems, lower level of economic or human capital development, labor market inflexibility, or any of many other institutional factors. The results remain robust when religious (Catholic vs. Protestant) composition is used as an instrumental variable for national uncertainty aversion. The international evidence presented helps explain why some countries are slower in embracing “new” (vs. traditional) industries.