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A Theoretical Model of Barter in Russia

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  • Jose Noguera
  • Susan Linz

Abstract

This paper develops a general equilibrium model and proposes a theory to explain the main stylized facts about the growth of barter transactions in Russia during the 1990s. Because of the high opportunity cost of using fiat money, with a tight enough credit market it may be optimal for firms to barter if they have access to that transaction technology, yet the riskiest firm will keep using money. We also claim that, in the short run, Russian managers might avoid restructuring because it jeopardizes their access to alternative transaction technologies, and that this phenomenon might also take place in well-developed market economies.

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Bibliographic Info

Paper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp207.

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Date of creation: Mar 2003
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Handle: RePEc:cer:papers:wp207

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Keywords: Barter; money; payment system; interest rate;

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References

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  1. Saul Estrin & Alan A. Bevan & Boris Kuznetsov & Mark E. Schaffer & Manuela Angelucci & Julian Fennema & Giovanni Mangiarotti, 2001. "The Determinants of Privatised Enterprise Performance in Russia," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 452, William Davidson Institute at the University of Michigan.
  2. Robert E. Lucas, Jr., 2000. "Inflation and Welfare," Econometrica, Econometric Society, Econometric Society, vol. 68(2), pages 247-274, March.
  3. Wendy Carlin & Steven Fries & Mark Schaffer & Paul Seabright, 2000. "Barter and non-monetary transactions in transition economies: Evidence from a cross-country survey," Working Papers, European Bank for Reconstruction and Development, Office of the Chief Economist 50, European Bank for Reconstruction and Development, Office of the Chief Economist.
  4. Blanchard, Olivier & Kremer, Michael R., 1997. "Disorganization," Scholarly Articles 3659691, Harvard University Department of Economics.
  5. Christian Mumssen & Irina Dolinskaya & Simon Commander & Irina Tytell, 2000. "Determinants of Barter in Russia," IMF Working Papers, International Monetary Fund 00/155, International Monetary Fund.
  6. Dalia Marin, 2002. "Trust versus illusion: What is driving demonetization in the former Soviet Union?," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 10(1), pages 173-200, March.
  7. Marin, Dalia & Schnitzer, Monika, 1997. "The Economic Institution of International Barter," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1658, C.E.P.R. Discussion Papers.
  8. Ickes, B.W. & Ryterman, R., 1993. "Roadblock to Economic Reform: Inter-Enterprise Debt and the Transition to Markets," Papers, Pennsylvania State - Department of Economics 2-93-1, Pennsylvania State - Department of Economics.
  9. Susan J. Linz & Gary Krueger, 1998. "Enterprise Restructuring in Russia's Transition Economy: Formal and Informal Mechanisms," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 152, William Davidson Institute at the University of Michigan.
  10. Brana, S. & Maurel, M., 1999. "Barter in Russia : Liquidity Shortage Versus Lack of Restructuring," Papiers d'Economie Mathématique et Applications, Université Panthéon-Sorbonne (Paris 1) 1999.98, Université Panthéon-Sorbonne (Paris 1).
  11. Gary Krueger & Susan J. Linz, 2000. "Virtual Reality: Barter and Restructuring in Russian Industry," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 465, William Davidson Institute at the University of Michigan.
  12. Ellingsen, Tore, 1998. "Payments in Kind," Working Paper Series in Economics and Finance, Stockholm School of Economics 244, Stockholm School of Economics, revised 10 Feb 2000.
  13. Canice Prendergast & Lars Stole, 2001. "Barter, Liquidity and Market Segmentation," CESifo Working Paper Series 586, CESifo Group Munich.
  14. Linz, Susan J. & Martin, Robert E., 1982. "Soviet enterprise behavior under uncertainty," Journal of Comparative Economics, Elsevier, vol. 6(1), pages 24-36, March.
  15. "Grossman, Gregory", 1992. "Comparative Study of Economic Systems after the Great Collapse," Economic Review, Hitotsubashi University, Hitotsubashi University, vol. 43(4), pages 298-304, January.
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