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Did Nordic Countries Recognize the Gathering Storm of World War II? Evidence from the Bond Markets

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Author Info
Daniel Waldenström
Bruno S. Frey

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Abstract

This paper analyzes and compares different ways of assessing how people perceived impending threats of war in the past. Conventional Nordic historiography of World War II claims there were few, if any, people in the Nordic countries who perceived a significantly increased threat of war between 1938 and early 1940. At the same time, historical methods face problems when it comes to capturing the often tacitly held beliefs of a large number of people in the past. In this paper, we analyze these assessments by looking at sudden shifts in sovereign debt yields and spreads in the Nordic bond markets at that time. Our results suggest that Nordic contemporaries indeed perceived significant war risk increases around the time of major war-related geopolitical events. While these findings question some – but not all – of standard Nordic World War II historiography, they also demonstrate the value of analyzing historical market prices to reassess the often tacitly held views and opinions of large groups of people in the past.

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Paper provided by Institute for Empirical Research in Economics - IEW in its series IEW - Working Papers with number iewwp336.

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Date of creation: Oct 2007
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Handle: RePEc:zur:iewwpx:336

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Related research
Keywords: Structural breaks; Sovereign debt; Capital markets; Historiography; Cliometrics; World War II.;

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Find related papers by JEL classification:
C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions
G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
N01 - Economic History - - General - - - Development of the Discipline: Historiographical; Sources and Methods
N44 - Economic History - - Government, War, Law, and Regulation - - - Europe: 1913-

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This page was last updated on 2009-11-26.

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