Lanne, Markku; Vesala, Timo - In: International Journal of Finance & Economics 15 (2010) 2, pp. 123-133
We argue that a transaction tax is likely to amplify, not dampen, volatility in foreign exchange markets. Our argument stems from the decentralized trading practice and the presumable discrepancy between 'informed' and 'uninformed' traders' valuations. Given that the informed valuations are...