Monetare versus In-Kind Exchange: A case of Demonetization


Demonetization is a dominant feature of transition in Russia and Ukraine. This paper studies a mechanism of decentralized trade and examines possibility of the development of in-kind trade as a consequence of difficulty to trade at the anonymous monetary market. In-kind trade allows to a group of agents, inefficient in production, to overcome the difficulty of direct barter providing them with an instrument which substitutes money.

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Keywords: decentralized trade; search; production inefficiency; in-kind exchange; demonetization

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