Measuring the Value Added by Money in Trade

The paper tests the proposition that money generates value in trade. It examines the data for 5,746 Russian companies for 1997 and finds that money accounts for 24.6 percent of their value-added. The functional form of the return on money in trade is determined to be positive and marginally declining. The paper imputes that Russian GDP lost 8.1 percent in 1997 because of diminished use of money in trade. It hypothesizes that the severity of the Great Depression in the USA of 1930s could have been significantly reduced if the proposed barter networks were implemented at the time.