Tying Trade Flows: A Theory of Countertrade

Dalia Marin and Monika Schnitzer ()

No 946, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: A countertrade contract ties an export to an import. Usually, countertrade is seen as a form of bilateralism and reciprocity and thus as an inefficient form of international exchange. In this paper we argue that there are circumstances where the tying of two technologically unrelated trade flows may be efficiency enhancing. We show that countertrade can be seen as an efficient institution that solves moral hazard problems and restores creditworthiness of countries with large outstanding debt. We test the implications of our model using a sample of 230 countertrade contacts.

Keywords: Countertrade; Creditworthiness; Double Moral Hazard Problem; Sovereign Debt; Technology Transfer (search for similar items in EconPapers)
JEL-codes: D23 F13 F34 L14 (search for similar items in EconPapers)
Date: 1994-05
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=946 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:946

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... pers/dp.php?dpno=946

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().