Working Paper: CEPR ID: DP2258
Authors: Mathilde Maurel; Sophie Brana
Abstract: Barter in Russia can be explained by firms' liquidity constraint: it is strongly correlated with financial tightness. However, a microeconomic analysis reveals that the rationale behind this liquidity constraint is different according to the firm situation. For firms in a good economic situation, but faced with adverse selection problems and having no access to bank credit, barter acts as a substitute for short-term credit. While for indebted firms, barter, in the same way as external finance, is a way of avoiding costly restructuring.
Keywords: barter; nonmonetary transactions; virtual economy; Russia; transition
JEL Codes: C22; C23; E50; P20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| tight monetary policy (E52) | increased barter transactions (E42) |
| good financial situations (D14) | barter as a mechanism to avoid costly restructuring (D47) |
| financial situation (D14) | barter usage (E42) |
| liquidity constraints (E41) | increased barter usage (E42) |
| worsening financial situation (F65) | increased barter activity (N13) |