Barter, credit and welfare: A theoretical inquiry into the barter phenomenon in Russia

Authors: Noguera, José¹; Linz, Susan J.²

Source: Economics of Transition, Volume 14, Number 4, October 2006 , pp. 719-745(27)

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Abstract:

This paper develops a model to investigate the welfare implications of barter in Russia and other transition economies during the 1990s. We argue that barter is a welfare-improving phenomenon that acts as a defence mechanism against monetary instability. When firms react to tighter credit markets by switching to barter, the risk they face diminishes, allowing for a higher level of production.

Keywords: Barter; welfare; Russia; E0; E6; P20; P21; P23; P26

Document Type: Research article

DOI: http://dx.doi.org/10.1111/j.1468-0351.2006.00270.x

Affiliations: 1: CERGE-EI, PO Box 882, Politických vězňů 7, 111 21 Prague 1, Czech Republic., Email: jose.noguera@cerge.cuni.cz 2: Michigan State University, 101 Marshall Hall, Department of Economics, Michigan State University, East Lansing, MI 48824, USA., Email: linz@msu.edu

Publication date: 2006-10-01