Reciprocal Exchange Networks: Implications for Macroeconomic Stability

Abstract

Long time series on reciprocal exchange networks or "barter rings" show that trade volume and credit on these networks are highly counter-cyclical. Most studies of the macroeconomic impact of the internet focus on the stabilizing effect of greater price and inventory flexibility. However, the pre-internet experience of two large barter networks - the International Reciprocal Trade Association (IRTA) in the US, and the Wirtschaftsring (WIR) of Switzerland - suggests that expanded credit availability may be even more stabilizing.