Creating creditworthiness through reciprocal trade

Marin, Dalia und Schnitzer, Monika (2003): Creating creditworthiness through reciprocal trade. In: Review of International Economics, Vol. 11, No. 1: pp. 159-174

Abstract

The paper investigates how barter can be used to finance imports and restore the creditworthiness of highly indebted countries when reputation as an enforcement mechanism for credit repayment does not work. The authors argue that payments in goods can be used to collateralize a trade credit and thus improve the creditor’s incentives to pursue defaulting debtors. Furthermore, it is shown that barter is particularly advantageous if export revenues of the debtor country are stochastic, even in the absence of risk aversion. The predictions of the model are consistent with data on actual barter contracts.

• Item Type: Journal article
• Faculties: Economics; Economics > Chairs > Chair of International Economics; Economics > Chairs > Seminar for Comparative Economics
• Subjects: 300 Social sciences > 330 Economics
• Language: English