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How did the capital market evaluate Germany’s prospects for winning World War I? Evidence from the Amsterdam market for government bonds


  • Tobias A. Jopp

    () (University of Regensburg)


This study uses prices for the German 3 percent imperial loan issued in several tranches since 1890 and still traded during World War I to measure capital market players’ real-time perceptions of the prospects for Germany as the war proceeded. Price data are gathered from the Amsterdam market for government bonds; the Netherlands remained neutral throughout war. Focusing on the window from August 24th 1915 to August 11th 1919, ten (twelve) turning points are identified in a baseline (extended) model. Each implies a significant adjustment of lenders’ confidence in Germany being able, or willing, to service its debts in the future. Two turning points stand out. In early January 1916, the price plummeted by 14.3 percent between the first and eleventh of the month, which was most likely due to the Military Service Act discussed in the British parliament. On September 19th 1918, the price dropped by 17.5 percent compared to the last available price quote from the end of July. This coincides with the Allied Powers’ revival on all fronts since the summer, leading to the ultimate collapse of the German lines.

Suggested Citation

  • 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).
  • Handle: RePEc:hes:wpaper:0052

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    References listed on IDEAS

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    More about this item


    Market Amsterdam; Bonds; Capital market; Confidence; Expectations; Germany; Sovereign debt; Structural breaks; World War I;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • N01 - Economic History - - General - - - Development of the Discipline: Historiographical; Sources and Methods
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-

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