How Government Bond Prices Reflect Wartime Events. The Case of the Stockholm Market

Zurich IEER Working Paper No. 102

27 Pages Posted: 25 Feb 2002

See all articles by Bruno S. Frey

Bruno S. Frey

CREMA; University of Basel

Daniel Waldenström

Research Institute of Industrial Economics

Date Written: January 16, 2002

Abstract

How are political events reflected in financial asset prices? Break points in sovereign debt prices are analyzed for Denmark, Norway, Finland, Sweden, Germany and Belgium during 1930-1948, using unique data from the Stockholm Stock Exchange. Unlike in countries involved in WWII, this market was unregulated. The outbreak of World War II heavily depressed prices of government bonds. Countries which were occupied (Belgium, Denmark and Norway) or under attack (Finland) saw their debt depreciate substantially. The battle of Stalingrad turns out indeed to be a turning-point of the war. This approach represents a complementary quantitative method to analyze the impact of political events.

Keywords: Financial Markets, Economic History, WWII, Europe, Cliometrics

JEL Classification: F34, G15, N24, N44

Suggested Citation

Frey, Bruno S. and Waldenstrom, Daniel, How Government Bond Prices Reflect Wartime Events. The Case of the Stockholm Market (January 16, 2002). Zurich IEER Working Paper No. 102. Available at SSRN: https://ssrn.com/abstract=301866 or http://dx.doi.org/10.2139/ssrn.301866

Bruno S. Frey (Contact Author)

CREMA ( email )

Südstrasse 11
Zurich, CH 8008
Switzerland
+41 44 380 00 78 (Phone)

University of Basel ( email )

Peter Merian-Weg 6
Basel, 4002
Switzerland

Daniel Waldenstrom

Research Institute of Industrial Economics ( email )

P.O. Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

HOME PAGE: http://www.ifn.se/danielw

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