Trust Vs Illusion: What is Driving Demonetization in Russia?
AbstractThe virtual economy argument for Russia suggests that barter -a payment in goods rather than cash - allows the parties to pretend that the manufacturing sector is producing value added by enabling this sector to sell its output at a higher price than its market value. We confront this prediction with the actual pricing behaviour of industrial sectors in the Ukraine in 1997. Based on pricing data of 165 barter deals we find no systematic difference in the pricing behaviour in non-cash transactions across sectors. What appears to matter for the pricing behaviour is whether the firm is on the selling or buying end of the barter transaction. We offer a model that sees this pricing behaviour as a mechanism to deal with the absence of trust and liquidity in the economy.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2570.
Date of creation: Sep 2000
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Other versions of this item:
- Marin, Dalia, 2000. "Trust vs Illusion: What is driving Demonetization in Russia?," Discussion Papers in Economics 73, University of Munich, Department of Economics.
- D20 - Microeconomics - - Production and Organizations - - - General
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
- P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General
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- Byung-Yeon Kim & Jukka Pirttilä & Jouko Rautava, 2002.
"Money, Barter and Inflation in Russia,"
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