- Tax banks to discourage systemic-risk creation, not to fund bailouts
- VOX : Research-based Policy Analysis and Commentary from leading Economists
- Document type
- Faculty of Economics and Business (FEB)
- Amsterdam Business School Research Institute (ABS-RI)
- Obama’s plans for bank taxation took markets, policymakers, and academics by surprise, leaving all parties now debating its
merits. This column suggests an alternative. By raising a Pigouvian tax based on banks’ individual contribution to systemic-risk
creation, the policy would target the externality caused by funding fragility while raising the cost of opportunistic risk
creation in good times.
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