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The Economic Institution of International Barter

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Author Info
Marin, Dalia
Schnitzer, Monika

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Abstract

Starting with the international debt crisis in the early 1980s, the volume of international barter trade increased substantially. 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. But there is also a risk that the debtor pays 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. The predictions of our model are consistent with data on actual barter contracts.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1658.

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Date of creation: Jun 1997
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Handle: RePEc:cpr:ceprdp:1658

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Related research
Keywords: Commodity Money; Creditworthiness; Economic Incentives and International Trade; Sovereign Debt;

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Find related papers by 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

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Eaton, Jonathan & Gersovitz, Mark, 1981. "Debt with Potential Repudiation: Theoretical and Empirical Analysis," Review of Economic Studies, Blackwell Publishing, vol. 48(2), pages 289-309, April. [Downloadable!] (restricted)
  2. Amann, Erwin & Marin, Dalia, 1994. "Risk-Sharing in International Trade: An Analysis of Countertrade," Journal of Industrial Economics, Blackwell Publishing, vol. 42(1), pages 63-77, March. [Downloadable!] (restricted)
  3. Dalia Marin & Monika Schnitzer, 2003. "Creating Creditworthiness through Reciprocal Trade," Review of International Economics, Blackwell Publishing, vol. 11(1), pages 159-174, February. [Downloadable!] (restricted)
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  4. Prendergast, Canice & Stole, Lars, 2001. "The non-monetary nature of gifts," European Economic Review, Elsevier, vol. 45(10), pages 1793-1810, December. [Downloadable!] (restricted)
  5. Stewart C. Myers & Raghuram G. Rajan, 1998. "The Paradox Of Liquidity," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 733-771, August. [Downloadable!] (restricted)
    Other versions:
  6. Abhijit V. Banerjee & Eric S. Maskin, 1996. "A Walrasian Theory of Money," Harvard Institute of Economic Research Working Papers 1753, Harvard - Institute of Economic Research.
  7. Kiyotaki, Nobuhiro & Wright, Randall, 1993. "A Search-Theoretic Approach to Monetary Economics," American Economic Review, American Economic Association, vol. 83(1), pages 63-77, March. [Downloadable!] (restricted)
  8. Bulow, Jeremy & Rogoff, Kenneth, 1989. "Sovereign Debt: Is to Forgive to Forget?," American Economic Review, American Economic Association, vol. 79(1), pages 43-50, March. [Downloadable!] (restricted)
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  9. Casella, Alessandra & Rauch, James E, 1998. "Overcoming Informational Barriers to International Resource Allocation: Prices and Group Ties," CEPR Discussion Papers 1978, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  10. Hennart, Jean-Francois & Anderson, Erin, 1993. "Countertrade and the Minimization of Transaction Costs: An Empirical Examination," Journal of Law, Economics and Organization, Oxford University Press, vol. 9(2), pages 290-313, October.
  11. Caves, Richard E & Marin, Dalia, 1992. "Countertrade Transactions: Theory and Evidence," Economic Journal, Royal Economic Society, vol. 102(414), pages 1171-83, September. [Downloadable!] (restricted)
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  12. Gooptu, Sudarshan & Martinez Peria, Maria Soledad, 1992. "Factors that affect short-term commercial bank lending to developing countries," Policy Research Working Paper Series 886, The World Bank. [Downloadable!]
  13. Kletzer, K.M. & Wright, B.D., 1990. "Sovereign Debt Renegotiation In A Consumption-Smoothing Model," Papers 610, Yale - Economic Growth Center.
  14. Marin, Dalia & Schnitzer, Monika, 1995. "Tying Trade Flows: A Theory of Countertrade with Evidence," American Economic Review, American Economic Association, vol. 85(5), pages 1047-64, December. [Downloadable!] (restricted)
  15. Banerjee, Abhijit V & Maskin, Eric S, 1996. "A Walrasian Theory of Money and Barter," The Quarterly Journal of Economics, MIT Press, vol. 111(4), pages 955-1005, November. [Downloadable!] (restricted)
  16. Eaton, Jonathan, 1990. "Debt Relief and the International Enforcement of Loan Contracts," Journal of Economic Perspectives, American Economic Association, vol. 4(1), pages 43-56, Winter. [Downloadable!] (restricted)
  17. Hart, Oliver & Moore, John, 1995. "Debt and Seniority: An Analysis of the Role of Hard Claims in Constraining Management," American Economic Review, American Economic Association, vol. 85(3), pages 567-85, June. [Downloadable!] (restricted)
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  18. Greif, Avner, 1992. "Institutions and International Trade: Lessons from the Commercial Revolution," American Economic Review, American Economic Association, vol. 82(2), pages 128-33, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ellingsen, Tore, 1998. "Payments in Kind," Working Paper Series in Economics and Finance 244, Stockholm School of Economics, revised 10 Feb 2000. [Downloadable!]
  2. Jose Noguera & Susan Linz, 2003. "A Theoretical Model of Barter in Russia," CERGE-EI Working Papers wp207, The Center for Economic Research and Graduate Education - Economic Institute, Prague. [Downloadable!]
  3. Barbara, CRESTI, 2003. "U.S. Domestic Barter : an Empirical Investigation," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2003005, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  4. Dalia Marin & Monika Schnitzer, 2000. "Disorganization and Financial Collapse," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  5. Barbara Cresti, 2005. "US domestic barter: an empirical investigation," Applied Economics, Taylor and Francis Journals, vol. 37(17), pages 1953-1966, September. [Downloadable!] (restricted)
  6. Dalia Marin & Monika Schnitzer, 1997. "Economic Incentives and International Trade," CIG Working Papers FS IV 97-24, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
    Other versions:
  7. Chong Ju Choi & Xeni Dassiou & Daniel Maldoom, 2003. "Trade and Linked Exchange; Price Discrimination Through Transaction Bundling," City University Economics Discussion Papers 03/07, Department of Economics, City University, London. [Downloadable!]
  8. Maria del Carmen Garcia-Alonso & Paul Levine & Antonia Morga, 2004. "Export Credit Gurantees, Moral Hazard and Exports Quality," Studies in Economics 0402, Department of Economics, University of Kent. [Downloadable!]
    Other versions:
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