Barter, Credit, and Welfare: A Theoretical Inquiry into the Barter Phenomenon in Russia

Noguera, José de J.; Linz, Susan J.

doi:10.2139/ssrn.728004

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Barter, Credit, and Welfare: A Theoretical Inquiry into the Barter Phenomenon in Russia

33 Pages Posted: 24 May 2005

See all articles by José de J. Noguera

José de J. Noguera

Charles University in Prague - CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences

Susan J. Linz

Michigan State University

Date Written: March 2005

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 defense 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, money, credit, payment system, interest rate

JEL Classification: E0, E6, P20, P21, P23, P26

Suggested Citation: Suggested Citation

Noguera Santaella, José de Jesus and Linz, Susan J., Barter, Credit, and Welfare: A Theoretical Inquiry into the Barter Phenomenon in Russia (March 2005). Available at SSRN: https://ssrn.com/abstract=728004 or http://dx.doi.org/10.2139/ssrn.728004