Wars and Markets: How Bond Values Reflect the Second World War

Abstract

Historical events are reflected in asset prices. Based on a unique data‐set, we analyse government bond prices of Germany and Austria traded on the Swiss bourse during the Second World War. Some war events generally considered crucial are clearly reflected in government bond prices; this holds, in particular, for the official outbreak of the war and the loss and gain of national sovereignty. Other events to which historians attach great importance are not reflected in bond prices, most prominently Germany’s capitulation in 1945. The analysis of financial markets provides a fruitful method for evaluating the importance contemporaries attached to historical events.