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The Economic Institution of International Barter

  • Marin, Dalia
  • Schnitzer, Monika

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
Date of revision:
Handle: RePEc:cpr:ceprdp:1658
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  1. repec:oup:qjecon:v:113:y:1998:i:3:p:733-771 is not listed on IDEAS
  2. Jeremy Bulow & Kenneth Rogoff, 1998. "Sovereign Debt: Is to Forgive to Forget," Levine's Working Paper Archive 209, David K. Levine.
  3. Caves, Richard E. & Marin, Dalia, 1992. "Countertrade Transactions: Theory and Evidence," Munich Reprints in Economics 3111, University of Munich, Department of Economics.
  4. 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.
  5. repec:oup:qjecon:v:111:y:1996:i:4:p:955-1005 is not listed on IDEAS
  6. James E. Rauch & Alessandra Casella, 1998. "Overcoming Informational Barriers to International Resource Allocation: Prices and Group Ties," NBER Working Papers 6628, National Bureau of Economic Research, Inc.
  7. Amann, Erwin & Marin, Dalia, 1994. "Risk-Sharing in International Trade," Munich Reprints in Economics 3110, University of Munich, Department of Economics.
  8. Oliver Hart & John Moore, 1994. "Debt and Seniority: An Analysis of the Role of Hard Claims in Constraining Management," NBER Working Papers 4886, National Bureau of Economic Research, Inc.
  9. 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.
  10. Marin, Dalia, 1990. "Tying in International Trade," Munich Reprints in Economics 3114, University of Munich, Department of Economics.
  11. 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.
  12. 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.
  13. Prendergast, Canice & Stole, Lars, 2001. "The non-monetary nature of gifts," European Economic Review, Elsevier, vol. 45(10), pages 1793-1810, December.
  14. Dalia Marin & Monika Schnitzer, 2003. "Creating Creditworthiness through Reciprocal Trade," Review of International Economics, Wiley Blackwell, vol. 11(1), pages 159-174, February.
  15. 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.
  16. repec:oup:restud:v:48:y:1981:i:2:p:289-309 is not listed on IDEAS
  17. Kletzer, K.M. & Wright, B.D., 1990. "Sovereign Debt Renegotiation In A Consumption-Smoothing Model," Papers 610, Yale - Economic Growth Center.
  18. 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.
  19. Amann, Erwin & Marin, Dalia, 1994. "Risk-Sharing in International Trade: An Analysis of Countertrade," Journal of Industrial Economics, Wiley Blackwell, vol. 42(1), pages 63-77, March.
  20. Stewart C. Myers & Raghuram G. Rajan, 1998. "The Paradox of Liquidity," CRSP working papers 339, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  21. repec:tpr:qjecon:v:113:y:1998:i:3:p:733-771 is not listed on IDEAS
  22. 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.
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