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Disorganization and financial collapse

  • Marin, Dalia
  • Schnitzer, Monika

Since the fall of communism, the former Soviet Union experienced a strong output decline and a dramatic increase in arrears and barter. We develop a model which explains how these three phenomena are connected. We introduce liquidity and credit constraints into a model of disorganization and show how these problems can alleviate the hold-up problem. We argue further that barter creates a hostage that allows to deal with disorganization when credit enforcement becomes prohibitively costly. Based on a firm survey in Ukraine in 1997, we test how input shortages, financial shortages and barter affect output growth of firms.

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Paper provided by University of Munich, Department of Economics in its series Munich Reprints in Economics with number 19258.

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Date of creation: 2005
Date of revision:
Publication status: Published in European Economic Review 2 49(2005): pp. 387-408
Handle: RePEc:lmu:muenar:19258
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Web page: http://www.vwl.uni-muenchen.de

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  1. 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.
  2. 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.
  3. Olivier Blanchard & Michael Kremer, 1997. "Disorganization," William Davidson Institute Working Papers Series 38, William Davidson Institute at the University of Michigan.
  4. Marin, Dalia & Schnitzer, Monika, 1997. "The Economic Institution of International Barter," CEPR Discussion Papers 1658, C.E.P.R. Discussion Papers.
  5. Roland, G. & Verdier, T., 1997. "Transition and the Output Fall," DELTA Working Papers 97-09, DELTA (Ecole normale supérieure).
  6. Perotti, E. C., 1998. "Inertial credit and opportunistic arrears in transition," European Economic Review, Elsevier, vol. 42(9), pages 1703-1725, November.
  7. 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.
  8. J. Rostowski, 1993. "The inter-enterprise debt explosion in the former Soviet Union: causes, consequences, cures," LSE Research Online Documents on Economics 20968, London School of Economics and Political Science, LSE Library.
  9. 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, June.
  10. Wendy Carlin & Steven Fries & Mark Schaffer & Paul Seabright, 2000. "Barter and non-monetary transactions in transition economies: Evidence from a cross-country survey," Working Papers 50, European Bank for Reconstruction and Development, Office of the Chief Economist.
  11. 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.
  12. Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-40, September.
  13. Guillermo Calvo & Fabrizio Coricelli, 1992. "Output Collapse in Eastern Europe; The Role of Credit," IMF Working Papers 92/64, International Monetary Fund.
  14. Marin, Dalia & Schnitzer, Monika, 2002. "The economic institution of international barter," Munich Reprints in Economics 19260, University of Munich, Department of Economics.
  15. 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.
  16. 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.
  17. Marin, Dalia, 2002. "Trust versus illusion: What is driving demonetization in the former Soviet Union?," Munich Reprints in Economics 19221, University of Munich, Department of Economics.
  18. repec:cup:cbooks:9780521480505 is not listed on IDEAS
  19. 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.
  20. 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.
  21. Canice Prendergast & Lars Stole, 2001. "Barter, Liquidity and Market Segmentation," CESifo Working Paper Series 586, CESifo Group Munich.
  22. Dalia Marin & Monika Schnitzer, 2003. "Creating Creditworthiness through Reciprocal Trade," Review of International Economics, Wiley Blackwell, vol. 11(1), pages 159-174, February.
  23. 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.
  24. Marin, Dalia & Schnitzer, Monika, 2003. "Creating creditworthiness through reciprocal trade," Munich Reprints in Economics 19259, University of Munich, Department of Economics.
  25. Simon Johnson & John McMillan & Christopher Woodruff, 1999. "Contract Enforcement in Transition," CESifo Working Paper Series 211, CESifo Group Munich.
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