2006•Economics of TransitionRequires access
Barter, credit and welfare
José Noguera, Susan J. Linz
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Abstract
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.