The Economic Institution Of International Barter
AbstractStarting with the international debt crisis in the 1980s, international barter increased substantially. More recently, barter has emerged in Russia and South East Asia. This paper examines how barter can help highly indebted countries to finance imports if they cannot use standard credit arrangements. We argue that payment in goods is easier to enforce than payment in money. However, debtors may pay with inferior quality products. We rank goods with respect to these incentive properties and derive the economic institution of commodity money which explains the trade pattern in barter. Our theoretical predictions are consistent with data on barter contracts. Copyright 2002 Royal Economic Society
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Bibliographic InfoArticle provided by Royal Economic Society in its journal The Economic Journal.
Volume (Year): 112 (2002)
Issue (Month): 479 (April)
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Other versions of this item:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
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