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

Daniel Waldenström and Bruno Frey

No 489, SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics

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 (search for similar items in EconPapers)
JEL-codes: F34 G15 N24 N44 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2002-01-17
New Economics Papers: this item is included in nep-eec and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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