The Economic Institution of International Barter
Year: 2002
Type: article
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.
Source: The Economic Journal
Authors: Dalia Marin, Monika Schnitzer
Language: English
Topic: Global trade and economics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2096776282