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Creating Creditworthiness through Reciprocal Trade

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  • Marin, Dalia
  • Schnitzer, Monika

Abstract

In the aftermath of the international debt crisis of the 1980s reciprocal trade arrangements experienced a resurgence. This paper examines how countertrade can help highly indebted countries to finance imports if they are not able to use standard credit arrangements. It compares the credit enforcement mechanisms discussed by the sovereign debt literature with those available under countertrade agreements and shows under what conditions countertrade can increase the debt capacity of highly indebted countries. The implications of our model for the design of optimal countertrade contracts are consistent with empirical evidence from a data set of 230 countertrade transactions.

Suggested Citation

  • Marin, Dalia & Schnitzer, Monika, 1995. "Creating Creditworthiness through Reciprocal Trade," CEPR Discussion Papers 1185, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:1185
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    Cited by:

    1. Yothin Jinjarak, 2004. "On the hidden links between financing costs and international trade patterns," Econometric Society 2004 Far Eastern Meetings 501, Econometric Society.
    2. Marin, Dalia & Schnitzer, Monika, 2005. "Disorganization and financial collapse," European Economic Review, Elsevier, vol. 49(2), pages 387-408, February.
    3. Jos?? Noguera & Susan J. Linz, 2005. "Barter, Credit, and Welfare: A theoretical inquiry into the barter phenomenon in Russia," William Davidson Institute Working Papers Series wp757, William Davidson Institute at the University of Michigan.
    4. Marianna Belloc, 2006. "Institutions and International Trade: A Reconsideration of Comparative Advantage," Journal of Economic Surveys, Wiley Blackwell, vol. 20(1), pages 3-26, February.
    5. Germán H. GONZALEZ & Alexis S. ESPOSTO & Valentina N. VIEGO, 2015. "Reciprocity in bilateral trade flows: An empirical analysis for trade between Australia and Latin American countries," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 15(1), pages 31-44.
    6. Dalia Marin & Monika Schnitzer, 2002. "The Economic Institution Of International Barter," Economic Journal, Royal Economic Society, vol. 112(479), pages 293-316, April.

    More about this item

    Keywords

    Countertrade; Creditworthiness; Sovereign Debt;
    All these keywords.

    JEL classification:

    • 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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