The effect of barter on the demand for money: an empirical analysis

Institutions, Business and the State in Russia

“…In the last 25 years there has been a noticeable increase in the level of barter activities throughout the market economies. In the United States the number of firms regularly involved in barter transactions rose 23 times, from 17,000 to 400,000, during the 1976-96 period (Marvasti & Smyth, 1999). It is true, however, that there are fundamental differences between barter operations in these countries and Russia.…”

Barter's Role in the Money–income Relationship

“…Banerjee & Maskin, 1996;Hayashi & Matsui, 1996;Williamson & Wright, 1994), the empirical literature on money demand has mostly ignored the existence of barter as a substitute for money. Marvasti and Smyth (1999) have argued that barter has an important influence on the level of money demand and should be included in its estimation. Their estimates of the semi-log money demand function indicate that real GDP, real volume of barter trade, interest rate, household income tax, dummies for structural change in monetary policy and for change in the velocity are important variables in the M2 money demand function.…”

Barter, credit and welfare

“…In developed market economies, such as the USA or the UK, barter is a growing activity because the costs associated with finding a partner are reduced with the use of modern computers and the Internet. Indeed, in the last two decades barter has become more common, especially among small firms, as information acquisition opportunities have expanded (Marvasti and Smyth, 1999). In developed market economies, barter works alongside a well‐established financial sector and does not cause any information asymmetry problem, yet it is unlikely to become a significant part of total transactions.…”