The Economic Institution Of International Barter

Dalia Marin and Monika Schnitzer ()

Economic Journal, 2002, vol. 112, issue 479, 293-316

Abstract: Starting with the international debt crisis in the 1980s, international barter increased substantially. More recently, barter has emerged in Russia and South East Asia. 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. However, debtors may pay 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. Our theoretical predictions are consistent with data on barter contracts. Copyright 2002 Royal Economic Society

Date: 2002
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Working Paper: The economic institution of international barter (2002)
Working Paper: The Economic Institution of International Barter (1997)
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