Frenkel, Michael; Stadtmann, Georg - In: Schmollers Jahrbuch : Journal of Applied Social Science … 124 (2004) 3, pp. 371-386
We use the Jeanne/Rose (2002) noise trader framework in foreign exchange markets to introduce a tax on international capital flows. As such a tax exerts two effects in opposite directions, we derive the capital control level that minimizes the risk premium and show the conditions under which a...