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Disorganization and Financial Collapse

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Author Info
Dalia Marin ()
Monika Schnitzer ()

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Abstract

Recently, Blanchard and Kremer (BK) argued that disorganization has led to the output decline in the former Soviet Union. In this paper we introduce liquidity and credit constraints into the BK model and show how these problems can alleviate the hold-up problem. We argue further that barter creates a hostage which allows to deal with disorganization when credit enforcement is prohibitively costly. The theory helps to explain how the three observed phenomena of output decline, inter-firms arrears and barter in transition economies are connected. Based on a survey of 165 barter deals in the Ukraine in 1997, we reproduce the BK result with firm level and deal specific data and we show that in addition to the input shortage the financial shortage and barter have each an important effect on output growth.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 339.

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Date of creation: 2000
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Handle: RePEc:ces:ceswps:_339

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Related research
Keywords: Transition; financial crisis; output fall; credit constraint; barter; hold-up;

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Find related papers by JEL classification:
D20 - Microeconomics - - Production and Organizations - - - General
G30 - Financial Economics - - Corporate Finance and Governance - - - General
O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Ickes, B.W. & Ryterman, R., 1993. "Roadblock to Economic Reform: Inter-Enterprise Debt and the Transition to Markets," Papers 2-93-1, Pennsylvania State - Department of Economics.
  2. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1992. "The Transition to a Market Economy: Pitfalls of Partial Reform," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 889-906, August. [Downloadable!] (restricted)
  3. Banerjee, Abhijit V & Maskin, Eric S, 1996. "A Walrasian Theory of Money and Barter," The Quarterly Journal of Economics, MIT Press, vol. 111(4), pages 955-1005, November. [Downloadable!] (restricted)
  4. Abhijit V. Banerjee & Eric S. Maskin, 1996. "A Walrasian Theory of Money," Harvard Institute of Economic Research Working Papers 1753, Harvard - Institute of Economic Research.
  5. Olivier Blanchard & Michael Kremer, 1997. "Disorganization," William Davidson Institute Working Papers Series 38, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
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  6. J Rostowski, 1993. "The Inter-Enterprise Debt Explosion in the Former Soviet Union: Causes, Consequences, Cures," CEP Discussion Papers dp0142, Centre for Economic Performance, LSE. [Downloadable!]
  7. Gérard Roland & Thierry Verdier, 1999. "Transition and the output fall," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(1), pages 1-28, March. [Downloadable!] (restricted)
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  8. Marin, Dalia & Schnitzer, Monika, 1997. "The Economic Institution of International Barter," CEPR Discussion Papers 1658, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Wendy Carlin & Steven Fries & Mark Schaffer & Paul Seabright, 2000. "Barter and Non-Monetary Transactions in Transition Economies: Evidence from a Cross-Country Survey," CERT Discussion Papers 0004, Centre for Economic Reform and Transformation, Heriot Watt University. [Downloadable!]
  2. Guriev, Sergei & Makarov, Igor & Maurel, Mathilde, 2001. "Debt Overhang and Barter in Russia," CEPR Discussion Papers 2686, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Dalia Marin & Haizhou Huang & Chenggang Xu, 2004. "Financial Crisis, Economic Recovery and Banking Development in Russia, Ukraine, and Other FSU Countries," IMF Working Papers 04/105, International Monetary Fund. [Downloadable!]
  4. Ellingsen, Tore, 1998. "Payments in Kind," Working Paper Series in Economics and Finance 244, Stockholm School of Economics, revised 10 Feb 2000. [Downloadable!]
  5. Haizhou Huang & Dalia Marin & Chenggang Xu, 2004. "Financial Crisis, Economic Recovery, and Banking Development in Russia, and other FSU Countries," Discussion Papers 79, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  6. Huang, Haizhou & Marin, Dalia & Xu, Cheng-Gang, 2003. "Financial Crisis, Economic Recovery and Banking Development in Former Soviet Union Economies," CEPR Discussion Papers 3794, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  7. Peev, Evgeni, 2002. "The Political Economy of Corporate Governance Change in Bulgaria: Washington Consensus, Primitive Accumulation of Capital, and Catching-Up in the 1990," CEI Working Paper Series 2002-1, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  8. Lubomír Lízal, 2002. "Determinants of Financial Distress: What Drives Bankruptcy in a Transition Economy? The Czech Republic Case," William Davidson Institute Working Papers Series 451, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  9. Richard B. Goud Jr., 2002. "Inter-Firm Non-Monetary Transactions in Russia: A Literature Review," Development and Comp Systems 0207001, EconWPA. [Downloadable!]
  10. Brana, Sophie & Maurel, Mathilde, 1999. "Barter in Russia: Liquidity Shortage Versus Lack of Restructuring," CEPR Discussion Papers 2258, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  11. Mario Gara, 2001. "The Emergence of Non-monetary Means of Payment in the Russian Economy," Post-Communist Economies, Taylor and Francis Journals, vol. 13(1), pages 5-39, March. [Downloadable!] (restricted)
  12. Wladimir Andreff, 2004. "Would a Second Transition Stage Prolong the Initial Period of Post-socialist Economic Transformation into Market Capitalism?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 1(1), pages 7-31, June. [Downloadable!]
  13. Barbara, CRESTI, 2003. "U.S. Domestic Barter : an Empirical Investigation," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2003005, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  14. Nauro F. Campos & Fabrizio Coricelli, 2002. "Growth in Transition: What We Know, What We Don't, and What We Should," William Davidson Institute Working Papers Series 470, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
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  15. Enrico Perotti, 2001. "Lessons from the Russian Meltdown: The Economics of Soft Legal Constraints," William Davidson Institute Working Papers Series 379, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
    Other versions:
  16. Gorodnichenko, Yuriy & Grygorenko, Yegor, 2008. "Are Oligarchs Productive? Theory and Evidence," IZA Discussion Papers 3282, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
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