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Money, Barter and Inflation in Russia

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  • Byung-Yeon Kim

    (University of Essex)

  • Jukka Pirttilä

    (Bank of Finland)

  • Jouko Rautava

    (Bank of Finland)

Abstract

Using a macroeconometric framework, this paper analyses relationships among money, barter and inflation in Russia during the transition period. Following the development of a theoretical framework that introduces barter in a standard small open economy macro model, we estimate our model using structural cointegration and vector error correction methods. Our findings suggest that barter has resulted partly from output losses and partly from a reduction in real money balances, but to a lesser extent. There is some evidence that the effect of barter on prices is less than that of money. We also find that increases in barter are affected by banking failure. Our results imply that a macro model that excludes barter fails to capture all the relevant information for inference on money and inflation in Russia.

Suggested Citation

  • Byung-Yeon Kim & Jukka Pirttilä & Jouko Rautava, 2002. "Money, Barter and Inflation in Russia," Macroeconomics 0209009, EconWPA.
  • Handle: RePEc:wpa:wuwpma:0209009
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Hildebrandt, Antje, 2002. "Too many to fail? : Inter-enterprise arrears in transition economies," BOFIT Discussion Papers 11/2002, Bank of Finland, Institute for Economies in Transition.
    2. Mechthild SCHROOTEN, 2003. "Fiscal Federalism And Regional Development In Russia," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 18, pages 53-72.
    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, EconWPA.
    5. Chen, Shikuan & Kao, Yi-Cheng, 2010. "Money, barter, and consumption interdependence," Economics Letters, Elsevier, vol. 106(2), pages 119-121, February.
    6. Korhonen, Iikka & Mehrotra, Aaron, 2007. "Money demand in post-crisis Russia : De-dollarisation and re-monetisation," BOFIT Discussion Papers 14/2007, Bank of Finland, Institute for Economies in Transition.
    7. Raghbendra Jha, 2008. "Inflation targeting in India: issues and prospects," International Review of Applied Economics, Taylor & Francis Journals, vol. 22(2), pages 259-270.
    8. Iikka Korhonen & Aaron Mehrotra, 2010. "Money Demand in Post-Crisis Russia: Dedollarization and Remonetization," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 46(2), pages 5-19, March.
    9. Antje Hildebrandt, 2002. "Too many to fail? Inter-enterprise arrears in transition economies," Development and Comp Systems 0212001, EconWPA.
    10. Iikka Korhonen & Aaron Mehrotra, 2010. "Money Demand in Post-Crisis Russia: Dedollarization and Remonetization," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 46(2), pages 5-19, March.

    More about this item

    Keywords

    Barter; money; inflation; cointegration; error-correction mechanism; Russia;

    JEL classification:

    • E - Macroeconomics and Monetary Economics

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