{"id":112862,"date":"2024-01-22T17:46:56","date_gmt":"2024-01-22T16:46:56","guid":{"rendered":"https:\/\/www.wifo.ac.at\/publication\/112862\/"},"modified":"2024-11-07T04:08:10","modified_gmt":"2024-11-07T03:08:10","slug":"asset-price-fluctuations-financial-crises-and-the-stabilizing-effects-of-a-general-transaction-tax","status":"publish","type":"publication","link":"https:\/\/www.wifo.ac.at\/en\/publication\/112862\/","title":{"rendered":"Asset Price Fluctuations, Financial Crises and the Stabilizing Effects of a General Transaction Tax"},"content":{"rendered":"","protected":false},"featured_media":0,"template":"","class_list":["post-112862","publication","type-publication","status-publish","hentry"],"acf":{"subtitle":"","text":"The deepening of the recent crisis was driven by the simultaneous devaluation of stock wealth, housing wealth and commodity wealth. The potential for this devaluation process had been \"built up\" during the boom of stock prices, house prices and commodity prices between 2003 and 2007. Hence, this paper sketches the main causes and effects of long swings in asset prices in the context of the current crisis. It is shown that \"bull markets\" are brought about by upward price runs (i.e., monotonic movements) lasting longer than counter-movements for an extended period of time (and vice versa for \"bear markets\"). This pattern of asset price dynamics is the result of \"trading as usual\" on (highly regulated) derivatives exchanges. The most popular trading practices like \"technical analysis\" contribute significantly to asset price overshooting. These practices strengthened both, the boom of asset prices until mid 2007 as well as their collapse in recent months. A general financial transaction tax would limit the wide fluctuations of stock prices, exchange rates and commodity prices.","onlinedate":"2009-08-18 02:00:00","lang":"English","publication_series":"","publication_date":"20090801","publication_date_year":"","publication_date_full":false,"publication_num_pages":"32","keywords":"[\"Boom and bust of asset prices\",\"speculation\",\"technical trading\",\"transaction tax\"]","jelcodes":"[]","related_publications":"[]","pdf":333943,"zip":null,"link":"","monthly_report":true,"monthly_report_main":false,"monthly_report_volume":"","monthly_report_pages":"","monthly_report_pages_sort":"0","issue":"340","journal":"WIFO Working Papers","publisher":"","invisible":false,"external":false,"embargo_date":null,"types":[44410],"research_groups":[3491],"collaboration":"","persons":[3841],"persons_data":"[{\"personId\":3841,\"personName\":\"Stephan Schulmeister\",\"organisationNames\":[]}]","clients":[],"subclients":[],"partners":[],"topics":[],"host_publication_title":"","host_publication_subtitle":"","place_of_publication":"","host_publication_editors":"[]","type_description":"","output_media":"","chapter":"","article_number":"","citations":"{\"apa\":\"<div class=\\\"rendering rendering_researchoutput  rendering_researchoutput_apa rendering_contributiontoperiodical rendering_apa rendering_contributiontoperiodical_apa\\\"><span>Schulmeister, S.<\\\/span> (2009). <span>Asset Price Fluctuations, Financial Crises and the Stabilizing Effects of a General Transaction Tax<\\\/span>. <span><em>WIFO Working Papers<\\\/em><\\\/span>, (340). <a onclick=\\\"window.open(this.href, '_blank','noopener,noreferrer'); return false;\\\" href=\\\"https:\\\/\\\/www.wifo.ac.at\\\/wwa\\\/pubid\\\/36441\\\" class=\\\"link\\\"><span>https:\\\/\\\/www.wifo.ac.at\\\/wwa\\\/pubid\\\/36441<\\\/span><\\\/a><\\\/div>\",\"vancouver\":\"<div class=\\\"rendering rendering_researchoutput  rendering_researchoutput_vancouver rendering_contributiontoperiodical rendering_vancouver rendering_contributiontoperiodical_vancouver\\\"><span>Schulmeister S<\\\/span>. <span class=\\\"title\\\"><span>Asset Price Fluctuations, Financial Crises and the Stabilizing Effects of a General Transaction Tax<\\\/span><\\\/span>. <span>WIFO Working Papers<\\\/span>. 2009 Aug;(340).<\\\/div>\",\"bibtex\":\"<div class=\\\"rendering rendering_researchoutput  rendering_researchoutput_bibtex rendering_contributiontoperiodical rendering_bibtex rendering_contributiontoperiodical_bibtex\\\"><div>@misc{0bb907e022f641299c0ae3172c474bff,<\\\/div><div>  title    = \\\"Asset Price Fluctuations, Financial Crises and the Stabilizing Effects of a General Transaction Tax\\\",<\\\/div><div>  abstract = \\\"The deepening of the recent crisis was driven by the simultaneous devaluation of stock wealth, housing wealth and commodity wealth. The potential for this devaluation process had been {\\\"}built up{\\\"} during the boom of stock prices, house prices and commodity prices between 2003 and 2007. Hence, this paper sketches the main causes and effects of long swings in asset prices in the context of the current crisis. It is shown that {\\\"}bull markets{\\\"} are brought about by upward price runs (i.e., monotonic movements) lasting longer than counter-movements for an extended period of time (and vice versa for {\\\"}bear markets{\\\"}). This pattern of asset price dynamics is the result of {\\\"}trading as usual{\\\"} on (highly regulated) derivatives exchanges. The most popular trading practices like {\\\"}technical analysis{\\\"} contribute significantly to asset price overshooting. These practices strengthened both, the boom of asset prices until mid 2007 as well as their collapse in recent months. A general financial transaction tax would limit the wide fluctuations of stock prices, exchange rates and commodity prices.\\\",<\\\/div><div>  keywords = \\\"Boom and bust of asset prices, speculation, technical trading, transaction tax, Boom and bust of asset prices, speculation, technical trading, transaction tax\\\",<\\\/div><div>  author   = \\\"Stephan Schulmeister\\\",<\\\/div><div>  year     = \\\"2009\\\",<\\\/div><div>  month    = aug,<\\\/div><div>  language = \\\"English\\\",<\\\/div><div>  journal  = \\\"WIFO Working Papers\\\",<\\\/div><p>}<\\\/p><\\\/div>\",\"ris\":\"<div class=\\\"rendering rendering_researchoutput  rendering_researchoutput_ris rendering_contributiontoperiodical rendering_ris rendering_contributiontoperiodical_ris\\\"><p>TY  - GEN<\\\/p><p>T1  - Asset Price Fluctuations, Financial Crises and the Stabilizing Effects of a General Transaction Tax<\\\/p><p>AU  - Schulmeister, Stephan<\\\/p><p>PY  - 2009\\\/8<\\\/p><p>Y1  - 2009\\\/8<\\\/p><p>N2  - The deepening of the recent crisis was driven by the simultaneous devaluation of stock wealth, housing wealth and commodity wealth. The potential for this devaluation process had been \\\"built up\\\" during the boom of stock prices, house prices and commodity prices between 2003 and 2007. Hence, this paper sketches the main causes and effects of long swings in asset prices in the context of the current crisis. It is shown that \\\"bull markets\\\" are brought about by upward price runs (i.e., monotonic movements) lasting longer than counter-movements for an extended period of time (and vice versa for \\\"bear markets\\\"). This pattern of asset price dynamics is the result of \\\"trading as usual\\\" on (highly regulated) derivatives exchanges. The most popular trading practices like \\\"technical analysis\\\" contribute significantly to asset price overshooting. These practices strengthened both, the boom of asset prices until mid 2007 as well as their collapse in recent months. A general financial transaction tax would limit the wide fluctuations of stock prices, exchange rates and commodity prices.<\\\/p><p>AB  - The deepening of the recent crisis was driven by the simultaneous devaluation of stock wealth, housing wealth and commodity wealth. The potential for this devaluation process had been \\\"built up\\\" during the boom of stock prices, house prices and commodity prices between 2003 and 2007. Hence, this paper sketches the main causes and effects of long swings in asset prices in the context of the current crisis. It is shown that \\\"bull markets\\\" are brought about by upward price runs (i.e., monotonic movements) lasting longer than counter-movements for an extended period of time (and vice versa for \\\"bear markets\\\"). This pattern of asset price dynamics is the result of \\\"trading as usual\\\" on (highly regulated) derivatives exchanges. The most popular trading practices like \\\"technical analysis\\\" contribute significantly to asset price overshooting. These practices strengthened both, the boom of asset prices until mid 2007 as well as their collapse in recent months. A general financial transaction tax would limit the wide fluctuations of stock prices, exchange rates and commodity prices.<\\\/p><p>KW  - Boom and bust of asset prices<\\\/p><p>KW  - speculation<\\\/p><p>KW  - technical trading<\\\/p><p>KW  - transaction tax<\\\/p><p>KW  - Boom and bust of asset prices<\\\/p><p>KW  - speculation<\\\/p><p>KW  - technical trading<\\\/p><p>KW  - transaction tax<\\\/p><p>M3  - WIFO series<\\\/p><p>JO  - WIFO Working Papers<\\\/p><p>JF  - WIFO Working Papers<\\\/p><p>ER  - <\\\/p><\\\/div>\"}","scientific_assistance":"[]","scientific_review":"[]","version":"","release_date":null,"expiration_date":null,"surveyor":"","research_assistance":"","edv":"","additional_info_de":"","additional_info_en":""},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.0 (Yoast SEO v28.0) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Asset Price Fluctuations, Financial Crises and the Stabilizing Effects of a General Transaction Tax - 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