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Contemporaries' opinions of the Allied and Central Powers' performance during the First World War: measuring turning points in perception with sovereign debt prices

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  • Tobias A. Jopp

Abstract

Which events did contemporary investors deem important turning points in the First World War? We address this question by looking for structural breaks in the daily yields of six major belligerents' sovereign bonds traded in Amsterdam. Detected breaks are checked for robustness in an empirical model taking into account market liquidity, portfolio effects, exchange rates, short-term interest rates, and inflation. Twenty-two turning points are identified, all of which turn out to be robust. We identify the Central Powers' spring offensive beginning in late March 1918 and the allied answer starting in late summer 1918 as the major turning points. Market liquidity is especially important in explaining the variation in yields.

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  • Tobias A. Jopp, 2016. "Contemporaries' opinions of the Allied and Central Powers' performance during the First World War: measuring turning points in perception with sovereign debt prices," European Review of Economic History, European Historical Economics Society, vol. 20(2), pages 242-273.
    • Handle: RePEc:oup:ereveh:v:20:y:2016:i:2:p:242-273.
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    1. Kang, Sung Won & Rockoff, Hugh, 2015. "Capitalizing patriotism: the Liberty loans of World War I," Financial History Review, Cambridge University Press, vol. 22(1), pages 45-78, April.
    2. Tobias A. Jopp, 2014. "How did the capital market evaluate Germany’s prospects for winning World War I? Evidence from the Amsterdam market for government bonds," Working Papers 0052, European Historical Economics Society (EHES).
    3. Broadberry,Stephen & Harrison,Mark (ed.), 2009. "The Economics of World War I," Cambridge Books, Cambridge University Press, number 9780521107259.
    4. Willard, Kristen L & Guinnane, Timothy W & Rosen, Harvey S, 1996. "Turning Points in the Civil War: Views from the Greenback Market," American Economic Review, American Economic Association, vol. 86(4), pages 1001-1018, September.
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    Cited by:

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    2. Elmas Yaldiz Hanedar & Avni Önder Hanedar & Ferdi Çelikay, 2017. "Effects of reforms and supervisory organizations: Evidence from the Ottoman Empire and the Istanbul bourse," Working Papers 0112, European Historical Economics Society (EHES).
    3. Michael Buchner & Tobias A. Jopp, 2019. "Full steam ahead: Insider knowledge, stock trading and the nationalization of the railways in Prussia around 1879," Working Papers 0151, European Historical Economics Society (EHES).
    4. Christoph A. Schaltegger & Lukas A. Schmid, 2021. "Public perceptions and bond markets during the Great War: the case of a neutral country," Public Choice, Springer, vol. 186(3), pages 537-561, March.
    5. Jopp, Tobias A., 2017. "How does the public perceive alliances? The Central and Allied Powers in World War I," IBF Paper Series 12-17, IBF – Institut für Bank- und Finanzgeschichte / Institute for Banking and Financial History, Frankfurt am Main.

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