History as Reflected in Capital Markets: The Case of World War II

Abstract

Historical events are reflected in asset prices. We analyze movements in the price of bonds issued by five European governments and traded on the Swiss bourse between 1928 and 1948, with special attention to the war years. Some war events that are generally considered crucial are clearly reflected in government bond prices. This holds, in particular, for the official outbreak of the war and changes in national sovereignty. But other events to which historians attach great importance are<jats:italic>not</jats:italic>reflected in bond prices, most prominently Germany's capitulation in 1945.