Money, Barter, and Inflation in Russia
Posted: 13 Oct 2004
This paper analyzes relationships among money, barter, and inflation in Russia during the transition period. Following the development of a theoretical framework that introduces barter into a standard macroeconomic model for a small, open economy, we estimate the model using structural cointegration and vector error-correction methods. Our findings suggest that Russian barter resulted partly from output losses, and, to a lesser extent, from the reduction in real money balances. We also find that increases in barter are affected by inefficiencies in the banking sector. Our results imply that increased barter contributed to generating persistent inflation and output decline in Russia.
JEL Classification: C32, E31, E51, P24
Suggested Citation: Suggested Citation