BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 15/2001:
Money, Barter and Inflation in Russia
Byung-Yeon Kim ()
, Jukka Pirttilä ()
and Jouko Rautava ()
Abstract: Using a macroeconometric framework, this paper analyses
relationships among money, barter and inflation in Russia during the
transition period. Following the development of a theoretical framework
that introduces barter in a standard small open economy macro model, we
estimate our model using structural cointegration and vector error
correction methods. Our findings suggest that barter has resulted partly
from output losses and partly from a reduction in real money balances, but
to a lesser extent. There is some evidence that the effect of barter on
prices is less than that of money. We also find that increases in barter
are affected by banking failure. Our results imply that a macro model that
excludes barter fails to capture all the relevant information for inference
on money and inflation in Russia.
Keywords: barter; money; inflation; cointegration; error-correction mechanism; Russia; (follow links to similar papers)
44 pages, December 19, 2001
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