Reciprocal exchange networks: implications for macroeconomic stability

Abstract

Decades of US and Swiss experience show that reciprocal exchange networks or "barter rings" are counter-cyclical-waxing as the business cycle wanes, and vice versa. These networks have important policy implications for new forms of e-commerce. Most studies of the Internet's macroeconomic impact focus on the stabilizing effect of greater price and inventory flexibility. The pre-Internet experience of these systems, however, suggests that expanded credit availability may be even more stabilizing-for networks that do not depend on monetary exchange.