Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/246983 
Authors: 
Year of Publication: 
2014
Series/Report no.: 
EHES Working Papers in Economic History No. 52
Publisher: 
European Historical Economics Society (EHES), s.l.
Abstract: 
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.
Subjects: 
Market Amsterdam
Bonds
Capital market
Confidence
Expectations
Germany
Sovereign debt
Structural breaks
World War I
JEL: 
C22
G14
H63
N01
N24
N44
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.