Knowra James Tobin James Tobin James Tobin (1918–2002) was an American economist who developed portfolio-selection theory, analyzed monetary policy, and proposed a tax on foreign-exchange transactions.
Portfolio theory : The study of how investors choose combinations of assets to balance expected return and risk. Tobin extended portfolio choice by showing how investors divide wealth between money and risky assets.
Mean–variance analysis : A method for evaluating investments by expected return and variance of returns. Tobin adapted this framework to explain optimal choices between safe money and risky assets.
Tobin tax : A proposed tax on foreign-exchange transactions intended to discourage short-term currency speculation. Tobin proposed this levy in 1972 as a way to reduce destabilizing currency-market flows.
John Maynard Keynes : A British economist whose theories of aggregate demand transformed twentieth-century macroeconomics. Tobin developed Keynesian ideas about money, employment, and economic stabilization.
Nobel Memorial Prize in Economic Sciences : An annual award recognizing outstanding contributions to economic sciences, established in 1968. Tobin received the 1981 prize for analyses of financial markets and their relations to spending, employment, production, and prices.
Liquidity preference : The preference for holding wealth in liquid forms, especially money, rather than less accessible assets. Tobin used portfolio choice to explain why people hold money despite its low return.
Separation theorem : The result that investors can share an optimal risky portfolio while choosing different mixes of that portfolio and a risk-free asset. Tobin’s portfolio result separated the choice of risky assets from the investor’s risk tolerance.
Foreign exchange market : The global market where currencies are exchanged and their relative prices are determined. The Tobin tax targets transactions in this market.
Harry Markowitz : An American economist who formalized portfolio selection using expected returns and risk. Markowitz’s portfolio framework supplied the foundation Tobin extended to money and safe assets.
Financial transaction tax : A tax imposed on trades of financial instruments, such as shares, bonds, or currencies. The Tobin tax became the best-known proposal in the wider debate over taxing financial transactions.
Show all 25