Disorganization and Financial Collapse
AbstractRecently, Blanchard and Kremer (BK) argued that disorganization has led to the output decline in the former Soviet Union. In this paper we introduce liquidity and credit constraints into the BK model and show how these problems can alleviate the hold-up problem. We argue further that barter creates a hostage which allows to deal with disorganization when credit enforcement is prohibitively costly. The theory helps to explain how the three observed phenomena of output decline, inter-firm arrears and barter in transition economies are connected. Based on a survey of 165 barter deals in the Ukraine in 1997, we reproduce the BK result with firm level and deal-specific data and we show that in addition to the input shortage the financial shortage and barter have each an important effect on output growth.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2245.
Date of creation: Sep 1999
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Other versions of this item:
- Dalia Marin & Monika Schnitzer, 1999. "Disorganization and Financial Collapse," William Davidson Institute Working Papers Series 285, William Davidson Institute at the University of Michigan.
- Dalia Marin & Monika Schnitzer, 2000. "Disorganization and Financial Collapse," CESifo Working Paper Series 339, CESifo Group Munich.
- D2 - Microeconomics - - Production and Organizations
- G3 - Financial Economics - - Corporate Finance and Governance
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- P3 - Economic Systems - - Socialist Institutions and Their Transitions
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.:
- Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-40, September.
- Blanchard, O & Kremer, M, 1996.
96-30, Massachusetts Institute of Technology (MIT), Department of Economics.
- Blanchard, Olivier & Kremer, Michael R., 1997. "Disorganization," Scholarly Articles 3659691, Harvard University Department of Economics.
- Olivier Blanchard & Michael Kremer, 1997. "Disorganization," William Davidson Institute Working Papers Series 38, William Davidson Institute at the University of Michigan.
- Konings, Jozef & Walsh, Patrick Paul, 1998.
"Disorganization in the Transition Process: Firm-Level Evidence from Ukraine,"
CEPR Discussion Papers
1928, C.E.P.R. Discussion Papers.
- Jozef Konings & Patrick Paul Walsh, 1998. "Disorganisation in the Transition Process: Firm Level Evidence from Ukraine," LICOS Discussion Papers 7198, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
- 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.
- 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.
- 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, vol. 10(1), pages 173-200, March.
- Johnson, Simon & McMillan, John & Woodruff, Christopher, 1999.
"Contract Enforcement in Transition,"
CEPR Discussion Papers
2081, C.E.P.R. Discussion Papers.
- Gerard Roland & Thierry Verdier, 1997.
"Transition and the Output Fall,"
William Davidson Institute Working Papers Series
37, William Davidson Institute at the University of Michigan.
- Wendy Carlin & Steven Fries & Mark Schaffer & Paul Seabright, 2000.
"Barter and non-monetary transactions in transition economies: Evidence from a cross-country survey,"
50, European Bank for Reconstruction and Development, Office of the Chief Economist.
- Wendy Carlin & Steven Fries & Mark Schaffer & Paul Seabright, 2000. "Barter and Non-Monetary Transactions in Transition Economies: Evidence from a Cross-Country Survey," CERT Discussion Papers 0004, Centre for Economic Reform and Transformation, Heriot Watt University.
- Canice Prendergast & Lars Stole, 2001. "Barter, Liquidity and Market Segmentation," CESifo Working Paper Series 586, CESifo Group Munich.
- J Rostowski, 1993. "The Inter-Enterprise Debt Explosion in the Former Soviet Union: Causes, Consequences, Cures," CEP Discussion Papers dp0142, Centre for Economic Performance, LSE.
- Perotti, E. C., 1998. "Inertial credit and opportunistic arrears in transition," European Economic Review, Elsevier, vol. 42(9), pages 1703-1725, November.
- Marin, Dalia & Schnitzer, Monika, 1995.
"Creating Creditworthiness through Reciprocal Trade,"
CEPR Discussion Papers
1185, C.E.P.R. Discussion Papers.
- Dalia Marin & Monika Schnitzer, 2003. "Creating Creditworthiness through Reciprocal Trade," Review of International Economics, Wiley Blackwell, vol. 11(1), pages 159-174, February.
- Marin, Dalia & Kaufmann, Daniel & Gorochowskij, Bogdan, 2000.
"Barter in Transition Economies: Competing Explanations Confront Ukrainian Data,"
Discussion Papers in Economics
63, University of Munich, Department of Economics.
- Gorochowskij, Bogdan & Kaufmann, Daniel & Marin, Dalia, 2000. "Barter In Transition Economies: Competing Explanations Confront Ukrainian Data," CEPR Discussion Papers 2432, C.E.P.R. Discussion Papers.
- Dalia Marin & Daniel Kaufmann & Bogdan Gorochowskij, 2000. "Barter in Transition Economies: Competing Explanations Confront Ukranian Data," William Davidson Institute Working Papers Series 287, William Davidson Institute at the University of Michigan.
- Guillermo Calvo & Fabrizio Coricelli, 1992.
"Output Collapse in Eastern Europe - The Role of Credit,"
IMF Working Papers
92/64, International Monetary Fund.
- Guillermo A. Calvo & Fabrizio Coricelli, 1993. "Output Collapse in Eastern Europe: The Role of Credit," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 32-52, March.
- Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1992. "The Transition to a Market Economy: Pitfalls of Partial Reform," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 889-906, August.
- Ickes, B.W. & Ryterman, R., 1993. "Roadblock to Economic Reform: Inter-Enterprise Debt and the Transition to Markets," Papers 2-93-1, Pennsylvania State - Department of Economics.
- Blejer,Mario I. & Eckstein,Zvi & Hercowitz,Zvi & Leiderman,Leonardo (ed.), 1996. "Financial Factors in Economic Stabilization and Growth," Cambridge Books, Cambridge University Press, number 9780521480505, December.
- Dalia Marin & Monika Schnitzer, 2002.
"The Economic Institution Of International Barter,"
Royal Economic Society, vol. 112(479), pages 293-316, April.
- 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.
- Dalia Marin & Monika Schnitzer, 2002. "Contracts in Trade and Transition: The Resurgence of Barter," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262133997, January.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.