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Debt Overhang and Barter in Russia

Author

Listed:
  • Sergei Guriev

    (New Economic School - New Economic School)

  • Igor Makarov

    (MIT Sloan - Sloan School of Management - MIT - Massachusetts Institute of Technology)

  • Mathilde Maurel

    () (ROSES - Réformes et Ouverture des Systèmes Economiques post-Socialistes - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper develops a model in which costly barter is used by firms to protect working capital against outside creditors. Although creditors could agree to postpone debt payments and to avoid destroying the firm's working capital, if the firm cannot commit not to divert cash ex post, the outcome of renegotiation still provides ex ante incentives to use barter. We show that the greater is the debt overhang, the more likely is the use of barter, with and without the possibility of debt restructuring. Empirical evidence from Russian firm-level data is shown to be consistent with the model's predictions.

Suggested Citation

  • Sergei Guriev & Igor Makarov & Mathilde Maurel, 2002. "Debt Overhang and Barter in Russia," Post-Print halshs-00468633, HAL.
  • Handle: RePEc:hal:journl:halshs-00468633
    DOI: 10.1006/jcec.2002.1797
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00468633
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    References listed on IDEAS

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    Cited by:

    1. Babetskaia-Kukharchuk, Oxana & Maurel, Mathilde, 2004. "Russia's accession to the WTO: the potential for trade increase," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 680-699, December.
    2. Kim, Byung-Yeon & Pirttila, Jukka, 2004. "Money, barter, and inflation in Russia," Journal of Comparative Economics, Elsevier, vol. 32(2), pages 297-314, June.
    3. Fleischman, Gary & Herz, Paul, 2005. "An empirical investigation of trends in barter activity in the Russian Federation," The International Journal of Accounting, Elsevier, vol. 40(1), pages 39-63.
    4. Richard B. Goud Jr., 2002. "Inter-Firm Non-Monetary Transactions in Russia: A Literature Review," Development and Comp Systems 0207001, University Library of Munich, Germany.
    5. Vlad Ivanenko & Dmitry Mikheyev, 2002. "The Role of Non-monetary Trade in Russian Transition," Post-Communist Economies, Taylor & Francis Journals, vol. 14(4), pages 405-419.
    6. Vasily Astrov & Korkut Boratav & Sandor Richter, 2002. "Monthly Report 05/2002," wiiw Monthly Reports 2002-05, The Vienna Institute for International Economic Studies, wiiw.
    7. Dolud, Olena, 2004. "Nichtmonetäre Transaktionen in der ukrainischen Landwirtschaft: Determinanten, Spezifika und Folgen," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 24, number 93080.
    8. Vlad Ivanenko, 2004. "Access to liquidity and non-monetary trade in Russia," Post-Communist Economies, Taylor & Francis Journals, vol. 16(1), pages 21-38.
    9. Vahabi, Mehrdad, 2011. "Soft budget constraint and the parastatal sector," MPRA Paper 37926, University Library of Munich, Germany.

    More about this item

    Keywords

    Debt; Russia;

    JEL classification:

    • P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General

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