The economic institution of international barter

Dalia Marin and Monika Schnitzer ()

Munich Reprints in Economics from University of Munich, Department of Economics

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.

Date: 2002
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Citations: View citations in EconPapers (14)

Published in Economic Journal 479 112(2002): pp. 293-316

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Related works:
Journal Article: The Economic Institution Of International Barter (2002)
Working Paper: The Economic Institution of International Barter (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenar:19260

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