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A Theoretical Model of Barter in Russia

  • Jose Noguera
  • Susan Linz

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

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Date of creation: Mar 2003
Date of revision:
Handle: RePEc:cer:papers:wp207
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  1. Blanchard, O & Kremer, M, 1996. "Disorganization," Working papers 96-30, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Brana, Sophie & Maurel, Mathilde, 1999. "Barter in Russia: Liquidity Shortage Versus Lack of Restructuring," CEPR Discussion Papers 2258, C.E.P.R. Discussion Papers.
  3. Ellingsen, Tore, 1998. "Payments in Kind," SSE/EFI Working Paper Series in Economics and Finance 244, Stockholm School of Economics, revised 10 Feb 2000.
  4. Canice Prendergast & Lars Stole, 2001. "Barter, Liquidity and Market Segmentation," CESifo Working Paper Series 586, CESifo Group Munich.
  5. 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.
  6. Linz, Susan J. & Martin, Robert E., 1982. "Soviet enterprise behavior under uncertainty," Journal of Comparative Economics, Elsevier, vol. 6(1), pages 24-36, March.
  7. Angelucci, Manuela & Bevan, Alan & Estrin, Saul & Fennema, Julian A & Kuznetsov, Boris & Mangiarotti, Giovanni & Schaffer, Mark E, 2002. "The Determinants of Privatized Enterprise Performance in Russia," CEPR Discussion Papers 3193, C.E.P.R. Discussion Papers.
  8. Christian Mumssen & Irina Dolinskaya & Simon Commander & Irina Tytell, 2000. "Determinants of Barter in Russia: An Empirical Analysis," IMF Working Papers 00/155, International Monetary Fund.
  9. Susan J. Linz & Gary Krueger, 1998. "Enterprise Restructuring in Russia's Transition Economy: Formal and Informal Mechanisms," William Davidson Institute Working Papers Series 152, William Davidson Institute at the University of Michigan.
  10. 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.
  11. Dalia Marin & Monika Schnitzer, 2002. "The Economic Institution Of International Barter," Economic Journal, Royal Economic Society, vol. 112(479), pages 293-316, April.
  12. Robert E. Lucas, Jr., 2000. "Inflation and Welfare," Econometrica, Econometric Society, vol. 68(2), pages 247-274, March.
  13. Gary Krueger & Susan J. Linz, 2000. "Virtual Reality: Barter and Restructuring in Russian Industry," William Davidson Institute Working Papers Series 465, William Davidson Institute at the University of Michigan.
  14. 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.
  15. "Grossman, Gregory", 1992. "Comparative Study of Economic Systems after the Great Collapse," Economic Review, Hitotsubashi University, vol. 43(4), pages 298-304, January.
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