Using Markets to Measure Pre-War Threat Assessments: The Nordic Countries Facing World War II

26 Pages Posted: 14 Nov 2006

See all articles by Daniel Waldenström

Daniel Waldenström

Research Institute of Industrial Economics (IFN)

Bruno S. Frey

CREMA; University of Basel

Date Written: November 2006


Nordic historians have asserted for a long time that in the Nordic countries only few people, if any, perceived increased threats of war prior to the World War II outbreak. This would explain, and possibly excuse, why their governments did not mobilize their armies until it was too late. This paper questions this established notion by deriving new estimates of widely held war threat assessments from the fluctuations of sovereign market yields collected from all Nordic bond markets at this period. Our results show that the Nordic contemporaries indeed perceived significant war risk increases around the time of major war-related geopolitical events. While these findings hence question some, but not all, of the standard Nordic World War II historiography, they also demonstrate the value of analyzing historical market prices to reassess the often tacit views and opinions of large groups of people in the past.

Keywords: Structural breaks, Sovereign debt, Capital markets, Historiography, Cliometrics, World War II

JEL Classification: C22, G14, N01, N44

Suggested Citation

Waldenström, Daniel and Frey, Bruno S., Using Markets to Measure Pre-War Threat Assessments: The Nordic Countries Facing World War II (November 2006). Available at SSRN: or

Daniel Waldenström (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15

Bruno S. Frey

CREMA ( email )

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

University of Basel ( email )

Peter Merian-Weg 6
Basel, 4002

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